Unrest in Libya is starting to affect Europe's oil supplies, although no member country of the International Energy Agency has requested the authorization to release strategic oil stocks, International Energy Agency Executive Director Nobuo Tanaka said Thursday.
Unrest in
Libya
is
starting to affect
Europe
's oil supplies, although no
member country of the International Energy Agency has requested the
authorization to release strategic oil stocks, International Energy Agency
Executive Director Nobuo Tanaka said Thursday.
"This disruption is starting to have an impact, especially on European
countries," Tanaka told Dow Jones Newswires in an exclusive interview on
the sidelines of a Extractive Industries Transparency Initiative in
Paris
. But
no country has asked the IEA to release their stockpiles.
The situation could worsen if violence in the northern African country
persists, though, Tanaka warned.
"February and March is a high maintenance season, so there's not much
demand. Maybe, after March there'll be more need," Tanaka said.
Unrest in
North Africa
has sent crude oil prices sharply higher in recent
weeks, as markets worry that the popular uprising that has brought to regime
change in
Tunisia
and
Egypt
could
spread eastwards to key oil suppliers, such as
Saudi
Arabia
. The IEA Wednesday said between
850,000 and 1 million barrels a day of Libyan crude is currently shut in.
Libya
normally produces just under 2% of the world's oil.
Oil futures are trading lower Thursday after Venezuelan President Hugo Chavez
proposed a multinational commission mediate the violent conflict between Libyan
leader Moammar Gadhafi and rebel groups. At 1133 GMT, the front-month April
Brent contract on
London
's ICE
futures exchange was down $1.05 at $115.30 a barrel. The front-month April
contract on the New York Mercantile Exchange was down 34 cents at $101.89 a
barrel.
Still, Tanaka sounded confident about the amount of options available to
stabilize the global oil supply.
"Uncertainty makes the market nervous, but there is enough oil,"
Tanaka said. "The Organization of Petroleum Exporting Countries and
Saudi
Arabia
have enough spare capacity
and are ready to produce more." Also, should the necessity arise, IEA
member countries remain ready to release 1.6 billion barrels of strategic oil
stocks "at any time," he said.
The agency last week opted against an emergency release of strategic stocks
from member countries, reasoning the market could respond without such an
extraordinary measure. The agency has cited reduced oil demand during refinery
maintenance season as a key factor in its decision to not release stocks
The head of IEA said financial speculation was partly to blame for sharp oil
price movements, and warned that if the price of a barrel of crude keeps
hovering at its current level for long enough, economic growth could suffer.
"The market is tightening because of economic recovery, but certainly
speculation has a role and amplifies volatility," he said.
If oil remains at $100 a barrel, this could have a "very significant
undermining effect on the health of economic growth, especially for emerging
developing economies."
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