India sees oil prices falling to $40/barrel

India's Petroleum Minister Mani Shankar Aiyar has predicted that the 'oil bubble' will burst soon.

He said that international oil prices, which have peaked to a historic high of over $60 a barrel, will retreat to below $40 per barrel.

Aiyar attributed the spike in international oil prices to speculative trading in the New York Mercantile Exchange, and said, "What goes up must come down. People who have nothing to do with oil are behind the bubbling up of prices. At one stage the bubble will burst (and) we might get oil at $35 to $40 a barrel."

The oil spike has again put pressure for raising domestic fuel prices. Petrol and diesel prices were raised by Rs 2.50 and Rs 2 per litre, respectively, earlier this month. He said the spurt in international oil prices had nothing to do with fundamentals of the market but were primarily driven by speculators.

On the Left's criticism of the recent petrol and diesel price hike, Aiyar said: "In my interactions with the Left leaders, they have been reasonable. They are also open and understanding. I hope even if they have decided not to participate in the United Progressive Alliance coordination committee meetings, we will continue to talk with them in other forums."

He, however, ruled out any cut in taxes, as demanded by the Left parties to contain the impact of surging global oil prices. "The cut in taxes is not possible."