IEA countries to release 60 million barrels of oil to offset Libyan disruption

[News_Editor]

IEA countries to release 60 million barrels of oil to offset Libyan disruption

2011-06-23 20:47:06 GMT+7 (ICT)

PARIS (BNO NEWS) -- The International Energy Agency (IEA) on Thursday announced thats its 28 member countries have agreed to release 60 million barrels of oil in the coming month in response to the ongoing disruption of oil supplies from Libya.

The oil supply disruption from Libya, which is engulfed in a civil war, has continued to worsen over the past few months. The normal seasonal increase in refiner demand expected for this summer will exacerbate the shortfall further, and greater tightness in the oil market threatens to undermine the fragile global economic recovery.

Half of the 60 million barrels will be provided by the United States from its Strategic Petroleum Reserve, according to the U.S. Department of Energy. The full total will be made available by 2 million barrels of oil per day over an initial period of 30 days.

"Today, for the third time in the history of the International Energy Agency, our member countries have decided to release stocks," said IEA Executive Director Nobuo Tanaka. "I expect this action will contribute to well-supplied markets and to ensuring a soft landing for the world economy."

The IEA estimates that the unrest in Libya has removed 132 million barrels of light, sweet crude oil from the market by the end of May. Although there are huge uncertainties, analysts generally agree that Libyan supplies will largely remain off the market for the rest of 2011.

Given this loss and the seasonal increase in demand, the IEA warmly welcomes the announced intentions to increase production by major oil producing countries. As these production increases will inevitably take time and world economies are still recovering, the threat of a serious market tightening, particularly for some grades of oil, poses an immediate requirement for additional oil or products to be made available to the market.

The IEA collective action is intended to complement expected increases in output by these producing countries, to help bridge the gap until sufficient additional oil from them reaches global markets.

Total oil stocks in IEA member countries amount to over 4.1 billion barrels, and nearly 1.6 billion barrels of this are public stocks held exclusively for emergency purposes. IEA net oil-importing countries have a legal obligation to hold emergency oil reserves equivalent to at least 90 days of net oil imports.

After the 60 million barrels have been made available to the market, the IEA Governing Board will reassess the situation and decide whether further steps have to be taken.

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