May 3 (Bloomberg) -- The Asian Development Bank said the rapid growth of the region's economies may only be sustained if there is a decline in global oil prices, now close to a record after rising on concerns over Iran.

Asia's developing economies are expected to grow at about 7.2 percent this year, almost matching last year's 7.4 percent, the lender has said.

``That forecast is based on the assumption that oil prices would gradually go down, or soften,'' Asian Development Bank President Harukiho Kuroda said today in his opening address at the lender's annual meeting being held at the southern Indian city of Hyderabad. ``The rapid growth of the Asian economies means that they would continue to face energy security issues as well as relatively high energy prices.''

The bank chief's comments came amid crude oil rising for a fourth day in New York before a United Nations hearing on Iran's nuclear program, amid concern oil supplies will be disrupted from the country.

Crude oil for June delivery rose as much as 38 cents, or 0.5 percent, to $74.99 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $74.60 at 1:13 p.m. in London, 51 percent higher than a year ago.

Prices in New York had risen to a record $75.35 on April 21 and April 24, the highest since trading began in 1983, on concern Iran's refusal to halt nuclear research would prompt international sanctions and lead to a cut in supplies. Oil prices have risen 22 percent this year.

`Unsustainably High'

``The current level of oil prices is unsustainably high,'' Kuroda said on the opening day of the three-day meeting. ``Oil producers should try to stabilize prices around more sustainable levels, compatible with the development of countries in the world, consuming countries, including developing member- countries in Asia.''

Oil producers should increase investment in exploration and production, the bank president said. ``All countries concerned should increase refinery capacity,'' Kuroda said.

Kuroda expects regional economies, including those of China and India, to ``continue to grow rapidly.''

The central bank chief of the host country, the second- fastest-growing large economy in the world after China, said oil prices posed an ``important risk'' to the South Asian nation's $775 billion economy.

Reserve Bank of India Governor Y.V. Reddy, speaking at the bank meeting, called on the Indian government to take a decision on fuel prices, unchanged for about eight months.

`Political Consensus'

Finance Minister Palaniappan Chidambaram said earlier in Hyderabad today that the government hadn't taken a decision on increasing fuel prices and that any such move would require ``political consensus.''

Prime Minister Manmohan Singh's government has limited fuel cost rises in India to 15 percent in the past year even as global prices climbed 40 percent, to avoid angering voters before state elections. Singh may raise petrol and diesel prices after polls conclude May 8, increasing transport costs and fuelling inflation in Asia's fourth-largest economy.

Any change in retail fuel prices may be decided by the third week of May, M.S. Srinivasan, secretary at India's oil ministry, said in New Delhi. State-run refiners may lose about 750 billion rupees ($16.7 billion) in revenue if the government maintains a cap on fuel prices compared with about 400 billion rupees a year ago, Srinivasan told reporters in New Delhi today.

Oil may reach $100 a barrel as energy demand soars, Iran's deputy oil minister, Hadi Nejad-Hosseinian, said yesterday during a visit to the Indian capital New Delhi.

Medium-Term Strategy

The Asian Development Bank will draw up a medium-term strategy after the annual meeting, Kuroda said.

``I expect the strategy will confirm ADB's fundamental goal of poverty alleviation and intensify our focus on a few key areas,'' apart from regional cooperation and integration, the bank president said.

The Asian Development Bank, which focuses on reducing poverty in Asia through sustainable economic growth, social development and good governance, will also discuss poverty- reduction in the continent at the Hyderabad meeting.

``The number of people in absolute poverty, living on less than $1 a day is rapidly declining,'' Kuroda said. ``But I have also seen how many others still live in the shadow of persistent poverty.''

The major challenge would be to bridge the gap between rich and poor and to ensure that the poor benefit from economic growth, the bank president said.

Growth would be maintained only if people had access to basic services such as clean water, sanitation, education and job training, Kuroda said. Economic expansion should not be damaging to the environment, he said.

Governance

He also called for better governance and anti-corruption efforts, saying ``regulatory weaknesses, policy uncertainty and market distortions'' were the biggest threat to private investment and growth.

Kuroda expects the ADB will more than double loans to India to $2.6 billion by 2008.

He said the loans would be used for water, transportation, energy and urban development. ADB currently provides less than $1.3 billion in loans to India, he said.

To contact the reporters on this story: Chitra Somayaji in Hyderabad at csomayaji@bloomberg.net; Cherian Thomas in Hyderabad at cthomas1@bloomberg.net.

Last Updated: May 3, 2006 09:00 EDT