Reuters reported that Mr Barack Obama president of USA faced stiff resistance to the possibility of releasing emergency oil reserves to quell rising energy prices with Asian allies and the head of the West's energy agency rejecting any need for action now.
A day after Reuters reported that the White House was dusting off plans for potentially tapping the Strategic Petroleum Reserve, Ms Maria van der Hoeven executive director of the International Energy Agency was blunt in her assessment there is no reason for a release.
She said that the IEA bases our actions on data and reality. The market is sufficiently supplied. She had not discussed a potential release with members of the Paris based IEA which is charged with coordinating use of consumer nations' strategic inventories. But if US gasoline prices, currently at about USD 3.80 a gallon, keep rising ahead of the November 6th 2012 election, Mr Obama could face increasing pressure to use the SPR to ease prices.
Republicans would likely blame the oil rise on Mr Obama's delaying the Canada to Texas Keystone XL pipeline and putting restrictions on offshore drilling after the BP oil spill.
Mr Kevin Massy of the Energy Security Initiative at the Brookings Institution said that "That could push the administration to at least increase the frequency of references to an SPR release. Prices for Brent crude LCOc1 tumbled as much as 2% to below USD 113 per barrel on news the United States was considering a release from reserves.
Key members of the IEA offered varied views, reflecting a divide between those who have tended to favor a more liberal use of the world's government-held stocks as a means to influence prices and aid economic growth and those who believe they should be strictly reserved for supply emergencies. While Britain and France appeared open to discussing the possibility of action.
A Japanese government source said that it is not as if Japan is short of oil. Stock releases are not done when the price is high but when supply is insufficient. Supplies are sufficient now.
Source - Reuters
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