Obama turns to G8 nations for support re possible oil shortage

With the impending July EU ban on Iran, Kyodo reports that U.S. President Obama is taking initiatives to lessen its negative impact. He plans to ask the support of Group of Eight (G8) to ready their oil stockpiles in case there’s a need to cover any supply shortfall arising from the Iranian oil embargo.

The White House, however, neither confirmed nor denied such news, but as soon as it came out, current crude oil prices in the U.S. further slipped down to $92.81 per barrel.

The report says that Japan’s PM Yoshihiko Noda has decided to accede to the US appeal following talks with heads of Britain and France.
Similarly, Francois Hollande, France’s President seems inclined to go by the US bid to tap federal reserves.  He said “I think the discussions will be easy and I don’t expect any conflict on this question.”

Oil prices per barrel dropped by 16 percent since March, when oil traders were warned of an impending release of oil stockpiles. Prices dropped further still amid issues of economic recovery.

Observers noted that Obama’s move to call on strategic reserves (for a second time under his wing) could help preclude gas price hikes in the summer months, but then it could also invite opposing remarks from critics who believe that these should be expended only on extreme supply emergencies.

Republican Joe Barton said the law prescribes a supply shortage to allow release of reserves, and the sanctions on Iran, and its outcome, does not fall under this category.
Another republican, Cory Gardner said, “He’s looking for a quick political fix by accessing the SPR, and he’s using any excuse to do that.”

On the other hand, Democrat Edward Markey defended the administration, saying that tapping the stockpiles is necessary amid possible instabilities that may arise from Iran’s nuclear program and resulting EU sanctions.

David Goldwyn, who once served as State Department Head for Energy Affairs, said that Obama’s call should be viewed from a “strategic perspective” in order to fully appreciate it.

The meeting at Camp David could serve as Obama’s venue for asking G8 to consider tapping oil reserves, emphasizing the urgency to level out crude oil prices, and encouraging serious participation in the Iranian sanctions.

Kyodo reported, however, that Germany seems disinclined to support Obama’s call. The International Energy Agency (IEA) also does not see the urgency to do so because of the ample oil supply, but analysts say that Iranian oil exports could drop tremendously come July, and so with supply.