The West’s energy watchdog urged oil producers to protect the global economy by boosting supply to cut fuel costs, and appeared to suggest its members could release emergency stockpiles if the Organization of the Petroleum Exporting Countries (Opec) failed to act.
“The governing board urges action from producers that will help avoid the negative global economic consequences which a further sharp market tightening could cause, and welcomes commitments to increase supply,” the International Energy Agency (IEA), said after a governing board meeting.
The statement comes just weeks ahead of Opec’s June 8 meeting and a day after price hawk Iran said its hardline President Mahmoud Ahmadinejad would represent Tehran at Opec as Iran’s caretaker oil minister.
The 12-member Opec says world supplies are adequate.
“The IEA governing board expressed serious concern that there are growing signs that the rise in oil prices since September is affecting the economic recovery,” the statement said.
The IEA said it stood ready to work with producers but added: “In this constructive spirit, we are prepared to consider using all tools that are at the disposal of IEA member countries.”
The 28-member IEA oversees some 1.5 billion barrels of government-held oil inventories that can be released in the event of an emergency outage. The loss of about 1.2 million barrels per day (mbpd) of Libyan exports in February is well short of the volumes that would normally trigger an IEA emergency release, but there has been speculation that the United States could tap government stockpiles if things get worse.
The Paris-based IEA could not give guidance on whether or not its statement was referring to a possible emergency release.
But oil prices fell more than $1 a barrel as analysts said consumers seemed to be getting frustrated with what they see of lack of action by Opec.
“This looks like a coded message to Opec, a shot across the bows before the June meeting,” said Bill Farren-Price of Petroleum Policy Intelligency.
President Barack Obama said in March a significant supply disruption or shift in the market could push him to use the reserves and that the administration had a plan that could be set in motion in a few days, not weeks, if needed.
The White House said tapping the 730 million barrel Strategic Petroleum Reserve remained a possibility. “Tapping the SPR continues to be one of the options on the table,” said spokesman Clark Stevens said.