US Treasury Secretary Henry Paulson assured Gulf investors on Monday that the United States will remain open to sovereign wealth funds and urged oil producers to open their energy sectors to foreign investment. “As we seek to open new markets abroad, America will keep our markets open at home to investment from private firms and from sovereign wealth funds,” Paulson said on the last stop of a Gulf tour. “We reject measures that would isolate us from the world economy,” he said in the UAE capital Abu Dhabi, whose government-run fund manages assets estimated at up to $875 billion. The Abu Dhabi Investment Authority injected $7.5 billion in capital in ailing US banking giant Citigroup last November, becoming one of the bank's biggest shareholders. The state-owned Kuwait Investment Authority has also pumped five billion dollars into Citigroup and Merrill Lynch. Paulson acknowledged concerns in the region resulting from the Dubai Ports World debacle, when US congressional opposition forced the Dubai government operator to offload US operations acquired through its 2006 acquisition of P and O. “Some here worry about growing protectionist sentiment in the United States, and they also worry specifically that US sentiment towards Middle East investment has been permanently affected by the Dubai Ports World case.” The US treasury chief, who met officials in Saudi Arabia, Qatar and the UAE, said some state funds were also concerned about a US attempt to set standards for their investments. The International Monetary Fund met last month to develop “best practice” guidelines for sovereign wealth funds and a working group is expected to release its recommendations by October. Paulson said there was concern among some fund managers that the initiative aimed to limit the scope of their activities or release privileged information. “In fact, our purpose is just the opposite. We are trying to quell calls for restrictions by urging sovereign wealth funds to endorse best practices to create a dynamic rise to the top and help allay concerns about opacity and systemic risks.” Paulson said there were “no simple or quick remedies” to current record high oil prices, currently around $126 a barrel after hitting a peak of more than $135 last month. And he said the Gulf region alone could not alleviate the market pressures. “High oil prices are the result of supply and demand factors that are likely to persist for some time... speculation and the depreciation of the dollar are likely only small factors behind oil price increases.” Paulson said easing market pressures would require matching supply to demand and this would be helped by opening the producers' oil markets to foreign investors. “On the supply side, we are urging all oil producing countries to open oil markets to foreign investment, which would support faster and more efficient growth,” he said. The UAE was a case in point, Paulson said. “As an important first step, Abu Dhabi is financing massive investments in upstream production and domestic refining capacity through partnerships with foreign companies.” Arab countries in the Gulf, which account for just under one fifth of global oil production, have opened their gas, petrochemicals and oil downstream sectors to foreign investment, with the exception of Kuwait which has so far shut out foreign investors from its downstream activities. The upstream sector remains mostly off limits to foreign oil majors, with Gulf countries preferring technical assistance contracts to production sharing agreements sought by international companies. Paulson said there has been a threefold increase in foreign direct investment over the past decade in the Gulf region, where US investment grew by 120 percent between 2001 and 2006. This was “in part due to liberalization of investment policies in the Gulf,” he said. “However, the potential is much greater, and in many Gulf countries investment barriers persist in key sectors, such as energy and real estate.” In London, oil prices weakened on Monday, extending last week's steep falls owing to concerns about lower global energy demand, traders said. New York's main oil futures contract, light sweet crude for July delivery, lost 60 cents to $126.75 a barrel. Brent North Sea crude for July fell 64 cents to $127.14. “Oil futures were lower, still under pressure from last week's heavy losses,” said Sucden analyst Andrey Kryuchenkov. Prices have shed about eight dollars since striking record peaks of $135.14 in London and $135.09 in New York on May 22. “Last week, crude futures suffered from a fresh wave of profit taking,” Kryuchenkov said. “The sell off was also (driven) by concerns that demand for energy is weakening due to record oil prices, with a wave of fuel strikes across the globe highlighting these fears.” New York crude plunged five dollars last week, while London Brent shed about four dollars, falling in line with a recovering US currency that makes oil more expensive for foreign buyers and therefore dampens demand. “The signs that demand is falling is forcing funds to seek better profits elsewhere,” said Alaron trader Phil Flynn. “Keep an eye on the $125 a barrel area. A close below (that level) could open up the selling floodgates.” Despite the recent easing prices, the high cost of crude has sparked widespread international alarm and US-led calls for the Organization of the Petroleum Exporting Countries to produce more oil. However, OPEC president Chakib Khelil on Saturday reiterated the organization's long-standing view that speculators and the weak dollar were partly to blame for runaway prices. “The consensus is that the crisis is not over and there is going to be a continuing impact on the prices of oil because of speculation,” he said. Khelil, also Algeria's energy minister, said OPEC would not review the situation again until it meets in Vienna on Sept. 9. OPEC, which pumps 40 percent of the world's oil, is reluctant to bend to demands that it produce more to dampen the red