Gordon Brown will today warn international leaders that sharp and unpredictable rises in oil prices risk "choking off" the global economy and pushing the world into a second recession.
At the Group of Eight summit in Italy, the Prime Minister will sound a pessimistic note about the economic outlook and suggest the limited recovery now under way is weaker than had been hoped.
Saying that the world economy is now at a "pivotal point," Mr Brown will list economic threats that could smother any recovery.
He will warn of the risks from falling trade and investment, growing unemployment and continued problems in the banking sector.
British officials are particularly concerned about oil prices, which have fluctuated wildly in recent months. Having fallen to $33 a barrel in December, oil is now back above $60, and some analysts predict big rises ahead.
Mr Brown will try to win support for new international market rules to ban speculative trading in oil, which officials say threatens to push up prices.
"We have to ensure the oil market does not get ahead of itself and choke off the global economy," said a British official.
At a meeting in France with President Nicholas Sarkozy on Monday, Mr Brown called for new market rules to prevent "undue speculation or speculation that is unfair in the oil market".
Mr Brown and Mr Sarkozy believe world leaders could try to set a "price range" for oil, attempting to set upper and lower limits within which prices could fluctuate.
Greater transparency and predictability in both demand and supply for oil could help smooth out peaks and troughs in the oil price, officials said. The summit should attempt to reduce such "information asymmetry" they said.
UK officials said they expect the G8 to give formal backing to the International Energy Forum, a body that brings together both oil consuming nations and oil producers.
However, they also conceded that trading on the international commodities markets also played a significant part in the volatility of the oil price.
In an attempt to address that, the G8 will debate moves towards common international standards on trading of oil futures contracts, hoping to force speculators and other investors to disclose more information about their positions.
Mr Brown said this week world leaders must "take seriously some of the warning signals that exist in the world economy".
In an interview last night, he added: "This is a second wake-up call for us. We have to deal with the challenge of resuming growth in the world economy."
The summit is being held in L'Aquila, which was struck by an earthquake in April, killing almost 300 people. The region has recently experienced aftershocks and the Italian authorities have prepared contingency plans for evacuating world leaders to Rome in the case of a major shock.
Silvio Berlusconi, the Italian Prime Minister, moved the summit venue to L'Aquila in a last-minute political gesture that has raised concerns about the logistics of the gathering.
Mr Brown, like other world leaders, will be staying in a converted police college building in L'Aquila.
British officials played down suggestions of "barracks" accommodation, saying they were satisfied that the college and other summit buildings had been brought to a suitable standard for the gathering.
Mr Berlusconi has faced criticism over his G8 role since his country has still failed to meet pledges to increase development aid he made at the G8 summit in Gleneagles in 2005.
To increase the pressure on Italy to meet such promises, Britain wants the G8 meeting to agree a new system of public "benchmarks" – regular independently-compiled public updates on how each G8 country is enacting the promises made at summits.
"There is a feeling that the credibility of the G8 depends on reporting on how it has done," said a UK official.
A senior British source denied a report that the UK is pressing for Italy to be kicked out of the G8 because of Mr Berlusconi's poor leadership. "The Italians have been very professional. We have no problem with them," the source said.
Continuing the trend towards larger and larger summit meeting, more than 30 heads of Government will actually attend the G8 meeting this week.
Tomorrow (THURS) the eight original members will be joined by China, India, Brazil, South Africa and Mexico, the "plus five" group of emerging economies.
Those nations have been at G8 meetings since 2006 and the L'Aquila summit is likely to assess their attendance and take another step towards making them formal members of the group.
On Friday, a group of African nations – Algeria, Egypt, Libya, Nigeria and Senegal – will attend for talks about food aid.
The G8 nations are expected to agree a new $15 billion fund to support the development of farming in African and other countries facing food instability. Britain will contribute $1.8 billion from existing aid budgets.
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