29-05-08 The United States wants oil-producing countries in the Middle East to promote private-sector investment in their energy sectors in an effort to combat a crude oil spike, a senior Treasury official said.
Noting there are "no easy short-term solutions" to the soaring prices, David McCormick, treasury undersecretary for international affairs, said it is necessary to close the medium- and longer-term gaps between supply and demand in oil markets.

McCormick said Treasury Secretary Henry Paulson will highlight the point during his visit to Saudi Arabia, Qatar and the United Arab Emirates for four days.
"If you look at global oil markets, there is a significant portion of those that are walled off from private investment," he said. "So to the extent that we can let market forces direct capital to those areas in which there is additional production opportunity and capacity, that's a worthwhile pursuit and that's not only in the Gulf but around the world."

Crude oil futures in New York rose onsupply concerns, with the benchmark contract finishing at $ 131.03 per barrel.
During his tour, Paulson is scheduled to meet with government and central bank officials from the three nations, and with officials of sovereign wealth funds there. McCormick said the treasury secretary will reiterate the US commitment to open investment, including that from SWFs -- government-run investment vehicles with rapidly growing clout.

US officials say the uproar over the Dubai-based DP World Ltd. attempt to take over some US port operations in 2006 sent the wrong signal to foreign investors that most foreign direct investment deals are subject to government review. SWFs have grown to $ 2-3 tn globally as a result of the crude oil spike and accumulation of foreign exchange reserves in emerging economies due to current account imbalances.
China, Kuwait, Norway, Russia, Saudi Arabia, Singapore and the UAE are among the countries with the largest SWFs.