Finance Ministers to Talk about Oil Prices in Upcoming Meeting
A source from the UK Treasury recently said that finance ministers will most likely talk about the oil markets during the October meetings of the International Monetary Fund following the statement of the G7 group of industrialized countries that they may use strategic crude reserves to mitigate current oil prices.
Italy, France and the U.S. are eager to see the releasing of some of these oil reserves as a way to lower the crude price per barrel and improve the world economy. Moreover, Britain has expressed its favor for the move, but officials of Canada and, to a lesser degree, those from Japan and Germany, remain unsure.
The issue may be raised during the IMF’s G20 mid-October meeting to be held in Tokyo. Western negotiators will get to meet their counterparts from Saudi Arabia and other oil-producing nations.
The discussion may inflict more pressure upon Saudi Arabia to make sure that there is sufficient oil supply, even if the IEA – which represents 28 oil-consuming countries – has expressed disagreement to such an inventory release, saying that there is sufficient supply in the market.
Recently, G7 finance ministers jointly encouraged oil producing nations to increase production, which brought about the chance of releasing strategic crude reserves if these nations fail to step up to the challenge.
George Osborne, the finance minister of Britain, returned from his vacation to help create the G7 letter which, according to him, was worded too harshly and did not properly reflect the member nations’ various opinions.
With Canada opposing an oil release even if the current oil price stays high enough that huge portions of the world experience economic despair, a joint tapping of oil reserves by the G7 appears to be unlikely. However, a powerful joint statement by the G20 at the IMF conference may help ease the crude oil price per barrel.
According to the UK source, the statement of the G7 indicated that a stock release was being seriously considered. Britain and the United States talked about an oil release last March, and those talks have been revived this month as speculations arise that such actions are only meant to soothe the electorate in anticipation of the U.S. presidential election in November.
Brent traded at about $112 a barrel as Hurricane Isaac left many oil production facilities along the Gulf Coast without any major damage.
Worries about disruption in supply due to the hurricane pushed the recent price of Brent to a peak level of $115.50 a barrel, while U.S. crude prices have increased by almost eight percent in August, the highest rise in a month since February.