Jakarta: Industrialised countries would consider a coordinated release of oil from stocks to meet any supply disruption stemming from the political turmoil in the Middle East, the IEA’s chief economist said on Tuesday.
Rising oil prices are already in the danger zone that threatens global economic growth and fuel demand and could rise further if turmoil continues in the Middle East, the International Energy Agency’s Fatih Birol said.
US crude futures hit a 2-1/2 year high on Tuesday as violence in Libya led one oil company there to shut in 100,000 barrels per day (bpd) of the country’s 1.6 million bpd output. Investors fear further disruption both in Libya and beyond as protests grip the Middle East and North Africa.
“If they think there is a need to do so, they may well decide to release those stocks in order to cover the markets, if there is a physical disruption,” he said in an interview, referring to IEA members’ 1.6 billion barrels of emergency oil stocks.
The IEA has a mandate to ask its members, the OECD nations, to release oil stocks in the case of emergency supply disruption.
High oil prices could derail economic growth and were not in the interest of either oil producers or consumers, Birol said.
“Oil prices are a serious risk for the global economic recovery,” Birol told reporters on the sideline of the conference in Indonesia on Tuesday. The IEA is adviser to 28 industrialised nations on energy policy.
“The global economic recovery is very fragile -- especially in OECD countries,” Birol said.
High oil prices would weaken trade balances, add to inflation and put pressure on central banks to adjust interest rates, he added.
Top oil exporter Saudi Arabia stood ready to pump more oil if necessary, Birol said. The kingdom is the only producer with significant spare capacity to meet any large global supply outage.
Oil ministers from top consuming and producing countries were set to meet at a conference in Riyadh on Tuesday.