IMF chief calls for more investment in oil production

International Monetary Fund (IMF) managing director Rodrigo Rato on Friday called on oil-producing nations to boost investment in production facilities in response to rising oil prices, which he said would have clear impact on growth.
"Oil-producing countries have to respond to this new crisis, with an increase in investment, oil production," Rato said as he headed to top oil-producing nation South Arabia on the first leg of a three-nation trip to the Middle East.
Although he placed the emphasis on action by consuming countries to cut down consumption in the largely demand-driven price spiral, Rato said there was also a need for greater transparency in oil markets to avert speculation.
"We believe that a more transparent oil market will help certainly more efficient prices," Rato told journalists during a stopover at the World Trade Organisation's (WTO) headquarters in Geneva.
The IMF chief reiterated that the risks of a severe brake on economic growth next year had increased, but said that it was too early to revise forecasts.
"Downside risks from oil have increased. That is a clear reality right now," he said.
"From the point of view of the impact of prices on growth, we see a clear impact next year in most areas", he said, adding, however: "We also see other positive forces of growth that will in part compensate for these new oil prices."
Rato said that it was too early to revise growth forecasts because of the current volitility seen in oil prices.
In the face of soaring oil prices, he recommended that consuming countries take measures to reduce their exposure to oil prices.
"We believe that oil-consuming countries must make efforts to diversify energy consumption and make it more efficient, and certainly to make efforts for consumers to realise the true impact of oil prices," Rato said.
The IMF chief will be in Saudi Arabia from October 23 to 24, Lebanon until October 25, and Egypt until October 26.
He was also due to meet finance ministers and central bankers from the six-nation Gulf Co-operation Council in Jeddah, Saudi Arabia.
Rato also called on oil-producing nations to step up investment in other sectors of their economy and for a boost to regional trade co-operation among economies in the Middle East.