June 22 (Bloomberg) -- Democratic presidential candidate Barack Obama today proposed new rules to curb speculation in oil markets, which his campaign blamed for record high oil prices, his advisers told reporters on a conference call.

Obama's proposal would increase government oversight of energy markets, require oil futures be traded on regulated exchanges, develop international regulations for overseas markets and initiate federal investigations into possible illegal trades.

``Everyone believes there is too much speculation in the oil markets,'' New Jersey's Democratic Governor Jon Corzine, an Obama adviser, told reporters on today's call.

The price of crude oil has doubled in the past year, rising to a record $139.89 in New York on June 16, and becoming a major issue in the U.S. election campaign. The president of the Organization of Petroleum Exporting Countries, Chakib Khelil, today blamed the record prices on speculative investors, global credit woes and geopolitics.

Corzine, a former chairman of investment bank Goldman, Sachs & Co., said the true price of oil is ``nowhere near'' where it now trades, and that the higher cost and volatility is due to speculation.

``A lot of the price of oil people put at the doorstep of speculators,'' Corzine said.

Obama's proposal would require the U.S. Commodity Futures Trading Commission to regulate trading in energy futures contracts and direct the commission to investigate ways to lessen speculation, such as increasing margin requirements.

Other Countries

Other provisions would require oil futures to be traded only on exchanges under U.S. regulations and encourage other countries to enact similar rules. Finally, Obama would call on the U.S. Department of Justice to investigate whether oil speculators have been illegally manipulating the price.

``It's about making markets function better,'' said Jason Furman, Obama's director of economic policy, on the call.

Tucker Bounds, a spokesman for Republican candidate John McCain, said Obama is following McCain's lead in trying to require CFTC regulation of energy futures trading.

``John McCain has supported bipartisan efforts to close this loophole and will work to address abuses in oil speculation,'' Bounds said in an e-mailed statement.

To contact the reporter on this story: Nicholas Johnston in Chicago at njohnston3@bloomberg.net

Last Updated: June 22, 2008 14:11 EDT