"We are completely convinced that any price above $60 a barrel is speculative element," he said here.
Finance Minister had mooted the idea of price band at a meeting called by oil kingpin Saudi Arabia of oil producers and consumers in Jeddah last month.
"There is evidence for that (speculative trading contributing to oil price spike). There is enormous literature and I had gone through it myself before I went to Jeddah," he said.
India had to raise petrol, diesel and domestic LPG prices due to spike in global oil prices that had put a Rs 246,000 crore burden on state-run firms. But the hike of Rs 5 a litre in petrol, Rs 3 per litre in diesel and Rs 50 per 14.2-kg LPG cylinder was one-fifth of the desired price increase.
Chidambaram said the gap will be met through oil bonds.
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Even after the price increase and duty cuts, Indian Oil, Bharat Petroleum and Hindustan Petroleum are projected to lose Rs 222,785 crore in revenues this fiscal.
Finance Ministry had at the time of June 4 price hike made a commitment to provide Rs 94,000 crore worth of oil bonds to state-run oil companies.
Upstream firms like ONGC and OIL were to contribute Rs 48,000 crore.