Oil markets are giant casinos with multi-billion dollar turnovers that make the betting palaces of Monte Carlo and Las Vegas look like back-street gambling dens.

Petroleum dealers like to work in near-secret conditions in a world with its own lexicon, codes and trade lore. They bitterly resent being accused by political leaders, as they were in the recent G8 summit in Italy, of pushing up oil prices through reckless trades. Crude traded at around $61 a barrel yesterday, well down from last year's peak of around $147, but still high enough, say G8 leaders, to pose a threat to global economic recovery.

A sustained 10% rise in the price of oil can knock as much as 0.4 percentage point off global economic growth over the subsequent 12 months, estimates Jim O'Neill, chief economist at investment bank Goldman Sachs.

European and US leaders want more transparency in the oil markets. They are concerned that speculation by hedge funds and other get-rich-quick investors is incresaing volatility. Political momentum is building to stop them. In recent months, oil producers and Asia's biggest oil-consuming nations have called for regulators to address the issue of price volatility, and the US Senate has blamed speculators for high commodity prices.

However, there is little agreement on how to tackle the problem. G8 leaders have radically different ideas on how to rein in the markets. The Europeans, such as British Prime Minister Gordon Brown and French President Nicolas Sarkozy, want oil producers, most of them are yoked together in the Opec cartel, to agree a target price range based on a clearer understanding of long-term fundamentals.

This sounds workable in theory but Saudi Arabia, the pillar of the Organisation of the Petroleum Exporting Countries, is opposed to the idea. Price hardliners like Iran and Venezuela are believed to be against it so it has little chance of being implemented.

In Washington, meanwhile, US leaders are taking a different approach. The Commodity Futures Trading Commission, the main US futures market regulator, said it is considering tougher regulation of oil-futures markets. The proposed rules, which drew immediate criticism from traders, would seek to curb the influence of speculative investors such as hedge funds and investment banks by limiting how much money any single trader can bet on any one commodity at a time.

CFTC Chairman Gary Gensler said the agency will hold public hearings to gather views from consumers, businesses and market participants on whether it should propose limits on trading in energy-future contracts. The agency also plans to require swap dealers and hedge funds to report holdings, including those traded at overseas exchanges, in a separate and routine way. Except in certain agricultural markets, many of these players are not subject to position limits or required to report off-exchange holdings.

Energy traders are concerned the regulations could crimp trade, increase costs in the market place and potentially scare away some players from the oil-drilling business as well as trading markets.

"Speculators play a crucial role in the futures market by providing liquidity to hedgers," such as oil producers and airlines, said Addison Armstrong, director of exchange-traded markets at TFS Energy Futures, a US brokerage. "Traders don't want rules that are going to change the game."

The interventionist line represents a significant shift for both the CFTC and the UK Government, both of which previously took a more free-market approach and stopped short of calling for tough action on speculators.

Much trade in oil futures is carried out by commercial traders such as oil companies, utilities and airlines, seeking to protect their profits against swings in energy prices. In recent years, big noncommercial traders such as hedge funds and investment banks have poured money into oil and other commodities. Such investors typically put their money in indexes that track the value of futures contracts, in which investors promise to pay a certain amount in the future for oil and other commodities.

As of July, 2008, financial investors had about $300bn riding on such indexes, roughly four times the level in January 2006, according to the International Energy Agency, a Paris-based watchdog. Money was sucked away from oil and other commodity markets during the second half of 2008, but investments have since surged, partly as a hedge against inflation and a weaker dollar: JP Morgan Chase analysts estimate that about $25bn (£15bn) has poured into commodities in the first half of 2009.

Oil-market analysts question the idea that speculative investments have pushed up prices. They attribute the current volatility to uncertain prospects for economic recovery - and the long-term rise to a surge in demand from China, India and other developing economies.

"No-one has a clear expectation of what the future price is going to be," said David Kirsch, an oil-market analyst at PFC Energy. "Putting limits on financial investment is only going to have a limited effect on overall volatility."

There is substantial evidence that US traders are bypassing the stricter trading environment on Wall Street and are conducting trades through the London oil market, which is more loosely regulated by the Financial Services Authority. US dealers say more and more trades will be done in London and other oil markets like Singapore if the CFTC imposes onerous restrictions on speculative positions.