Tokyo: The United States and other industrialised nations are unlikely to push for a second release of emergency oil supplies, the head of the International Energy Agency said on Thursday, hours before a decision is due to be made.
The members of the IEA agreed to release 60 million barrels in emergency stockpiles last month for only the third time in history, concerned that high oil prices were hurting a fragile global economy.
Oil prices fell after the release but have since moved higher again, raising the possibility the IEA would boost world supplies of oil once again.
“No country asked me to release additional barrels,” the IEA’s executive director, Nobuo Tanaka, told Reuters in an interview. “We will decide probably in a matter of hours.”
A decision to release stocks has to be backed by a unanimous decision of the IEA’s 28 members.
Oil prices fell more than 10% in the days after the IEA shocked world markets by announcing the emergency release of supplies on 23 June.
The day before that decision Brent crude was trading around $114 a barrel. On Thursday it was changing hands at $117.58.
Indeed, Tanaka said oil market fundamentals were tightening despite the release of the stockpiles.
“We have to monitor the situation very carefully,” Tanaka said. “We know the market has been tightening as we had predicted.”
The agency would be flexible and would be ready to act and release more oil if necessary, Tanaka said.
Around 600,000 barrels per day of emergency stocks are reaching markets, Tanaka said. That is well below the 2 million bpd initially planned.
The IEA said earlier in July that slightly less than the 60 million barrels would be released. Oil would probably continue to move into the market from stockpiles in August, Tanaka added.
Top oil exporter Saudi Arabia was expected to increase its oil output to as much as 10 million barrels per day in July, up around 200,000 bpd from June, Tanaka said.
Saudi Arabia has boosted supply unilaterally after it failed to convince other Opec members of the need to make a coordinated increase in supply in June. The IEA release followed that failure.
The last emergency release of supplies by the IEA was in 2005 when Hurricane Katrina devastated oil infrastructure in the US Gulf of Mexico. The only other release in the 37-year history of the IEA was at the time of the first Gulf War.
Traders and analysts have said there is no sign yet of the kind of shortage to mandate tapping the West’s emergency oil reserves.
Sources had said that Germany and Italy were expected to oppose any further IEA emergency oil reserve release because they were not much in favor of the decision in June.
Tanaka has said the IEA has enough oil to continue releasing from reserves at the same rate for 24 months more if necessary.
The agency, part of the Paris-based OECD, was formed in response to the 1973/74 oil crisis and promotes energy diversity and efficiency.