Chidambaram said that causes for the current oil crisis were unregulated over the counter markets and future trading. He also urged the oil producing and consuming nations to rescue oil trading from the clutches of speculators. Referring to India hit by an inflation rate of 11.05 per cent, he said that even oil producing nations like Russia, Indonesia, Saudi Arabia and Venezuela were affected by double digit inflation rates.
In case, the global economy slows down or slips into recession due to soaring oil prices, not only the oil consuming countries but also the oil producing nations would suffer, he added.
According to price band mechanism proposed by Chidambaram, consuming countries will guarantee that oil prices will not fall below an agreed level and producing countries will guarantee that they will not rise above a guaranteed level.
The prices will be determined by the market forces only between these two levels.