France wants oil producers and consumers to agree to price regulation in an effort to safeguard buyers from market volatility and protect energy investments, French president Nicolas Sarkozy said on Tuesday.

During an official visit to the capital of the United Arab Emirates, Sarkozy said France and the UAE might soon make a joint initiative on the issue.

"Why don't producer countries and consumers agree on general price guidelines to give to the market a price range which would guarantee investments (in producer countries) over the long term but which would not overwhelm consumer economies," he said in a speech.

He added that he would propose the idea at a summit of the Group of Eight world power leaders in Italy in July, saying that all sides needed better visibility over energy pricing.

"On the one hand, prices that are too high seriously destabilize the global economy. On the other hand, lasting low prices create future (price) shocks," he said.

Sarkozy said energy firms had to have sufficient funds to pay for major investment projects to tap new oil reserves, saying the world would face energy shortages in the years ahead if this did not happen.

The French president made a similar proposal in January, suggesting that the Organization of Petroleum Exporting Countries and other oil-producing nations negotiate guaranteed prices with their main customers in the developed world.

Officials in Paris believe wild price fluctuation over the past 18 months means regulation would be attractive to both consumers and producers, but Sarkozy's suggestion has so far failed to build momentum.

The price of crude oil soared to almost $150 a barrel last year, only to fall to under $50 some months later. US crude oil is forecast to average $52.47 a barrel in 2009, according to a recent Reuters poll of analysts.-Reuters