US lawmakers said yesterday they intend to tighten restrictions on investors, to limit speculation on the soaring price of oil and bring the price of a barrel back down.

Members of Congress said on Monday that they intend to tighten investment restrictions on pension funds, investment banks and other large investors who they blame for driving up the price of fuel. They say that speculation in crude futures has nearly doubled since 2000 and had raised the price of oil by up to $70.

“Make no mistake about it, the excessive speculation in commodity markets is having a devastating effect at the gas pump that is rippling through our entire economy," said Democratic congressman Bart Stupak, who chaired the hearing of a House Energy and Commerce subcommittee

Michael Masters, portfolio manager of the hedge fund Masters Capital Management, told yesterday’s congressional hearing that with greater regulation, oil prices could drop to $65 or $70 a barrel within a month.

Meanwhile, US treasury secretary Henry Paulson warned of a deepening economic slowdown unless oil producing nations, such as the world’s biggest oil exporter, Saudi Arabia, did not raise production.

“This is a very, very important issue because the high price of oil is creating economic issues...and is a heavy burden for people around the world,” said Mr Paulson.

“In my judgment, it’s got a very real risk of prolonging this economic slowdown, but this is not a situation that avails itself to a quick fix,” he said, though he added that both oil producers and consumers needed to work together to find a solution and cope with the crisis.

Saudi Arabia said at an emergency meeting of oil producing and consuming countries in Jeddah over the weekend that it will raise daily crude output by 200,000 barrels to 9.7 million barrels next month, and committed to pumping more if needed. Market analysts and American politicans said the rise in production was insufficient, saying production had to rise to at least 500,000 barrels. Saudi Arabian Oil Minister Ali Al-Naimi admitted yesterday that the move was unlikely to tame prices.

Light, sweet crude for August delivery is currently trading at $136.90 a barrel, a 16 cent rise. Brent crude futures rose 1 cent to $135.92 a barrel.

Investors remained concern over supply disruptions out of Nigeria and new European Union sanctions against Iran.

Production shut down in the Africa’s largest oil producer, last week as rebels targeted facilities run by oil giants Shell and Chevron. Though the militants declared a ceasefire on Sunday, analysts said they were not convinced production in Nigeria will resume soon.

There was also concern about new EU new sanctions against Iran, implemented yesterday in response to its nuclear program. The EU imposed additional financial and travel restrictions on a list of Iranian companies and experts, including the country's largest bank, but stopped short of banning oil and gas exports from Iran, the second-largest oil producing nation.

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