G7 warning over rising oil prices

Finance ministers from the Group of Seven (G7) leading industrial countries have warned of the dangers to the world's economy from higher oil prices.

The G7 was responding to news that the price of oil had closed above $75 a barrel in New York for the first time.

US-Iran tensions and rising demand are being blamed for the increase.

In a statement after their Washington meeting, the G7 said that although the world economy was in good shape, oil prices could throw things off course.

The Japanese Finance Minister Sadakazu Tanigaki said that while there had not been a risk of inflation so far, the current high oil price meant they would have to monitor the situation closely.

UK Finance Minister Gordon Brown said rising demand was just as much to blame as instability in some major oil producers, such as Iran.

"Asia now takes a third of the world's oil. Where, at one point a few decades ago, it only took around 10%.

"Therefore the demand pressures on oil are such that we need a long-term solution to this, better transparency, more production, more drilling, more investment, more petrochemical investment in particular," he said.

The G7 countries - the United States, Japan, Germany, Britain, France, Canada and Italy - said China needed to allow its currency to move more freely, in order to help reduce its huge trade surplus with the rest of the world, BBC Correspondent Mike Fox reports.

But the ministers also pointed to imbalances in the US economy, and said tackling global imbalances was a shared responsibility requiring action by every region of the world.