IEA readies for possible oil reserve drawdown
Paris-based International Energy Agency took a proactive stance when it disclosed that it is “ready to act” in case the prevailing oil market conditions worsen. It also said that the agency is carefully coordinating with its 28-member states.
Of late, crude oil prices were seen to have dropped partly due to recent deliberations on the distribution of oil stocks. In 2011, armed conflict in Libya triggered an actual release of oil reserves as production of crude oil went way below expectations.
Maria Van der Hoeven, Executive Director of IEA stated that the agency was “concerned” about the “very high” prices of oil prevailing in the market. She was vocal about these having adverse effects on the world’s economies. Also, it may have some bearing on oil-related investments and developments.
She informed that “The IEA is closely monitoring market developments and will remain in close contact with member countries to exchange views about the oil-market situation.” She added that “As we have mentioned many times, the IEA was created to respond to serious physical supply disruptions, and we remain ready to act if market conditions so warrant.”
Exorbitant costs of crude oil in 2011 hampered the resurgence of U.S. and Europe’s failing economies. This has been a relentless issue during country-wide debates in France and the United States as presidential elections draw near although other matters like investment strategies and portfolios were somehow discussed in debates among U.S. presidential candidates.
Paul Horsnell, who currently heads Barclays Capital commodities research group informed Platts news service that a U.S “release is highly likely but the judgment of when and why and what triggers it will be driven by circumstances and news.”
In early March, the American and British states announced that there would be a close coordination between the two countries in case a release of oil stock is pursued.