The Financial Services Authority (FSA) said that it could veto American efforts to impose regulation on the London oil market, as the City took centre stage in an escalating row over the role of speculators in driving up the global price of crude oil.

Stuart Fraser, the City of London's policy chief, described the call as “American imperialism” and rebutted attacks on the FSA in the US Congress as “unhelpful”. In an announcement on Tuesday, America's Commodity Futures Trading Commission (CFTC) sought to extend disclosure requirements to oil futures trading on the ICE Europe exchange in the City.

It followed mounting criticism of the FSA's regulatory approach by a powerful group of senators with close links to Barack Obama, who have blamed rising oil prices on “manipulation and excessive speculation” in the London oil market.

However, a spokeswoman for the FSA said that it had the power to veto the CFTC's plan, which was presented as a fait accompli. “It's one of many options that we may consider,” she said. “We are keeping the matter under review.” She added that the FSA has a “very different approach” to market regulation to the CFTC but remained in talks with the Americans. The CFTC normally takes 120 days to implement its rulings.

Mr Fraser, who effectively runs the City of London and recently has been selected as the Chancellor's leading consultant on City competitiveness, said: “This is a retrograde step. We are trying to work with the Americans on this kind of thing to help reduce manipulation, but that requires a partnership approach. If one partner behaves like this, it is not acceptable.

“If you restrict regulated markets, you simply drive them to unregulated markets.”

Privately, senior FSA officials are said to be furious that the CFTC made the announcement without its prior approval. They believe that the move is being driven by senators seeking to find a scapegoat for rising oil prices in the run-up to the November elections.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive