G8 ministers voice oil price fear

Russia has stressed the importance of energy security

Rising oil prices and inflation are the key issues that will be addressed by G8 finance ministers as the world's richest nations meet in St Petersburg.

According to a draft communique, high and volatile oil prices are a threat to the world economy and they need to be dealt with as a shared responsibility.

Oil prices have risen sharply in 2006, as geopolitical threats have increased.

The two-day Russian meeting started on Friday and is a forerunner to the G8's annual meeting set for 15 to 17 July.

Energy security

Russia's Finance Minister Alexei Kudrin stressed the need for G8 nations to address the issue of energy supplies as oil has surged beyond the $75-a-barrel mark at times this year.

Russia, which supplies a quarter of Europe's gas, has repeatedly stressed the importance of energy security during its G8 presidency.

However, its own policies have proved controversial ever since the nation's monopoly, Gazprom, cut off supplies to Europe during a pricing dispute with Ukraine.

The high oil prices boost petrol costs and crimp consumer spending

The G8's concerns over energy supplies are far from new.

At their previous meeting in April, ministers voiced worries over energy costs and encouraged oil producers to step-up investments.

Unrest in Nigeria as well as in Iraq have both contributed to higher oil prices.

Meanwhile, supply fears have been compounded in recent weeks by growing tensions between the US and Iran over Tehran's nuclear programme.

If the US opts for sanctions, Tehran could reduce supplies, analysts say.

Debt relief

Mr Kudrin also announced that Russia would forgive $700m in debt owed by the world's poorest nations.

The joint plan, with the World Bank, entails a debt-for-development swap by which $250m of the $700m would have to be earmarked for development in Sub-Saharan Africa.

The money would be set aside to combat infectious diseases and improve energy services the bank said.

The news came as Oxfam called on G8 nations to relieve more countries from debt.

Finance ministers from Russia, the US, Canada, Japan, Germany, France and the UK are expected to release a communique on Saturday focusing on energy and inflation.

According to the Reuters news agency, the document will say that the world's economic growth is increasingly broad-based despite adverse political developments.