IEA sees no more releases of emergency oil stocks

AP News
Posted: Sep 07, 2011 6:01 PM
IEA sees no more releases of emergency oil stocks

The new chief of the International Energy Agency said Wednesday that she didn't foresee any more oil stock releases despite continuing uncertainty in Libya and other parts of the Arab world.

The United States and more than two dozen other countries that make up the IEA put 60 million barrels of oil into the market this summer in an effort to drive down skyrocketing oil prices. Supplies were particularly tight because Libyan exports had slowed to a trickle during the uprising against strongman Moammar Gadhafi at the same time that demand was ramping up in the warmer summer months.

Maria van der Hoeven, who began her tenure last week, said in an interview Wednesday that the release was a success but there would be no more.

"What we did with this collective action was adequate, we did it at the right moment, and it met its objectives," she said.

Falling prices indicate that it did achieve its goal, at least somewhat.

Benchmark oil peaked at nearly $114 in late April, and it is now trading around $90. Brent crude has given up around 13 percent since the beginning of May.

While 60 million gallons covers only what the world uses roughly every 16 hours, the release _ which was staggered throughout the summer _ was credited with at least some of that drop in price. Concerns that the global economy could sink back into recession and thus tank demand has also played a role.

It was the largest sale of crude ever from world strategic reserves, and only the third since the IEA was formed in 1974 after the Arab oil embargo. The IEA released oil in 2005 after Hurricane Katrina and in 1990 and 1991 after Iraq invaded Kuwait.

Though she doesn't see the need for more strategic releases, Van der Hoeven, who was previously the Dutch finance minister, said that supplies continue to be tight because of unrest in Libya.

Europe has been particularly affected, since it mostly relies on the kind of oil found in the North African country, which produced about 1.6 million barrels per day before the uprising that overthrew Gadhafi. That supply has all but dried up.

"Everything has been affected. We're talking about wells, we're talking about transport, we're talking about ports, we're talking about refining capacity," said Van der Hoeven about Libya's production capacity.

The IEA doesn't expect the country to be back up to its pre-conflict production levels until at least 2013, she said, holding out the possibility that the world could have to wait even longer.

Still, Van der Hoeven said she thinks the market is "workable" since slow growth is tempering demand.

The Paris-based agency recently cut its global oil demand forecast for this year, saying it will be 89.5 million barrels a day on average. That's 60,000 barrels a day fewer than originally predicted.

Van der Hoeven replaces Japan's Nobuo Tanaka.