Oil

Geithner says U.S. could tap oil reserves in some circumstances

Reuters News
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Posted: Feb 24, 2012 10:23 AM
Geithner says U.S. could tap oil reserves in some circumstances

WASHINGTON (Reuters) - The Obama administration is weighing the circumstances that could warrant tapping the nation's strategic oil reserve, Treasury Secretary Timothy Geithner said on Friday as he defended sanctions on Iran.

"There is a case for the use of the reserve in some circumstances and we will continue to look at those and evaluate that carefully," Geithner said on CNBC television.

A handful of Democrat lawmakers have urged the White House to release some of the nation's oil stockpiles to combat oil prices that are now topping $123 a barrel.

Looming U.S. sanctions on Iran's oil buyers as well as an impending European Union oil embargo have forced countries to start cutting back on their Iranian oil purchases. Concerns that supplies might grow tight have driven oil prices higher.

"Obviously Iran can do a lot of damage to the global economy," Geithner said, talking about the risk of tighter supplies. "We are working very carefully to try to minimize that risk, make sure there are alternative sources of supply from Saudi Arabia and others to help compensate for reduced exports from Iran. That is an important part of our strategy," he said.

Iran, the world's fifth-largest oil exporter, has threatened to close the Strait of Hormuz, the main Gulf oil shipping lane, in response to the sanctions aimed at getting it to abandon its nuclear program.

Last summer, the Obama administration joined other Western nations to release a total of 60 million barrels of oil in response to supply disruptions in Libya.

(Reporting by Rachelle Younglai; Editing by James Dalgleish)