Abu Dhabi (Platts)--2Jun2008

Current high oil prices are mainly due to supply and demand fundamentals,
with the activity of speculators and the weak US dollar having only a modest
impact on prices, US US Treasury Secretary Henry Paulson aid Monday.

Speaking in Abu Dhabi on a tour of the region, Paulson said the Gulf
region alone could do little to ease the current pressure in the oil market,
and urged oil-producing countries to open the doors to foreign investment.

"High oil prices are the result of supply and demand factors that are
likely to persist for some time," Paulson said in a speech to the US-UAE
business council.

"Supplies have been affected by low capacity expansion and declining
yields, while demand has surged largely due to growth in emerging markets," he
said.

"Speculation and the depreciation of the dollar are likely only small
factors behind oil price increases."

"Beyond this region record high oil prices are putting a huge burden on
the world economy. There are no simple or quick remedies for this, and let me
be clear in stating that the Gulf region alone cannot alleviate the pressures
in global oil markets."

"Successfully alleviating the pressures in oil markets will require
matching supply to demand. On the demand side we need to allow market forces
to work, to avoid subsidies and other potentially distorting policies. We also
need to invest in renewable fuels and alternative technologies and to reduce
oil dependency through improved energy efficiency."

"On the supply side, we are urging all oil producing countries to open
oil markets to foreign investment which would support faster and more
efficient growth. More liberalization along these lines would benefit all oil
producing countries," he said.