The Group of 20 nations should negotiate a benchmark “fair” cost of oil with the Organization of Petroleum Exporting Countries and limit price movements within a band, the United Nations said.
The G-20 needs to “act decisively to moderate the volatility of oil and food prices,” the agency said in a statement as it released an annual report on Asia and the Pacific in Bangkok today.
Oil has climbed 36 percent in the past year, with unrest in the Middle East and North Africa adding to supply concerns. The U.N. says rising food and oil costs threaten to drive millions more people into poverty in Asia, most severely affecting the populations of nations including Bangladesh, India and Nepal.
Crude for June delivery traded at more than $108 per barrel as of 10:45 a.m. Singapore time today.
The G-20, a group made up of the European Union and 19 of the world’s richest nations, could also regulate commodity markets to reduce speculation and “discipline the conversion of food into bio-fuels,” the U.N. said.
China’s economy may expand 9.5 percent this year and India’s by 8.7 percent, it said.
The agency said that volatile money flows are a risk for the region, creating asset bubbles and causing currencies to rise. Capital controls are “an important element in the policy tool kit,” it said.