It is possible that some countries and companies are increasing their inventories of oil. It is also possible that oil producing countries are exploiting the situation and raising the prices, he said.
If oil prices continued to remain high, it would affect the growth rate of the developing countries while fueling inflation, he said.
The finance minister said this in turn would impact developing countries.
It will rob developing countries, like India, of a critical percentage of their potential growth, he said. He further added: In fact, every $5 dollar a barrel increase in oil prices affects our GDP by nearly 0.5% and also contributes to inflation.
Mr Chidambaram added that though the demand supply gap had narrowed, there was a small surplus on the supply side.
Even if the demand has risen especially from countries like China and India, there is no justification for any price beyond $35-40 a barrel, the minister said, adding that he held talks on the issue with various global investment communities and World Bank officials.
However he said, though prices are beyond control, we must find innovative ways to cut costs.