The U.S. and 27 allies will release emergency oil stockpiles through the International Energy Agency for only the third time in more than three decades as the war in Libya chokes global supplies.
The release of 60 million barrels, or 2 million barrels a day of oil within the first 30 days, will be coordinated by the IEA, the Paris-based agency said in a statement today. The move comes 15 days after the Organization of Petroleum Exporting Countries met in Vienna and kept production quotas unchanged as Saudi Arabia didn't find enough support from other members to boost supply amid oil prices above $100 a barrel in London.
"The consumer-producer dialogue is going to run into some troubled waters" said Harry Tchilinguirian, head of commodity- markets strategy at BNP Paribas SA in London. "Stocks are only a short term bridge to supply outages. If Saudi is prepared to fill the gap, the need for a stock released is lessened. This reduces Saudi incentive to increase production."
Nobuo Tanaka, the IEA's executive director, told reporters in Paris today that high oil prices damage the economy of every country. U.S. Federal Reserve officials yesterday cut their forecasts for growth and employment this year and next, pushing oil prices lower earlier today.
Oil futures fell further after the IEA announcement. Brent crude for August settlement tumbled as much $6.11, or 5.4%, to $108.10 a barrel, the lowest since May 17, on London's ICE Futures Europe exchange.
It is the third time the IEA has coordinated the use of emergency stockpiles twice since the agency was founded in 1974. The first occasion was during the 1991 Persian Gulf War, and the second when Hurricane Katrina damaged oil rigs and refineries in the Gulf of Mexico in 2005.
The IEA is an energy policy adviser to 28 industrialized nations including the U.S., Japan and Germany.
The release of 60 million barrels, or 2 million barrels a day of oil within the first 30 days, will be coordinated by the IEA, the Paris-based agency said in a statement today. The move comes 15 days after the Organization of Petroleum Exporting Countries met in Vienna and kept production quotas unchanged as Saudi Arabia didn't find enough support from other members to boost supply amid oil prices above $100 a barrel in London.
Nobuo Tanaka, the IEA's executive director, told reporters in Paris today that high oil prices damage the economy of every country. U.S. Federal Reserve officials yesterday cut their forecasts for growth and employment this year and next, pushing oil prices lower earlier today.
Oil futures fell further after the IEA announcement. Brent crude for August settlement tumbled as much $6.11, or 5.4%, to $108.10 a barrel, the lowest since May 17, on London's ICE Futures Europe exchange.
It is the third time the IEA has coordinated the use of emergency stockpiles twice since the agency was founded in 1974. The first occasion was during the 1991 Persian Gulf War, and the second when Hurricane Katrina damaged oil rigs and refineries in the Gulf of Mexico in 2005.
The IEA is an energy policy adviser to 28 industrialized nations including the U.S., Japan and Germany.
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