US President Barack Obama faced stiff resistance to the possibility of releasing emergency oil reserves to damp down prices yesterday, with key Asian allies and the head of the West’s energy agency saying there was no cause for action.
A day after Reuters reported that the White House was “dusting off” plans for potentially tapping the Strategic Petroleum Reserve (SPR), the executive director of the International Energy Agency, Maria van der Hoeven, was blunt in her assessment: “There is no reason for a release.”
The IEA “bases our actions on data and reality. The market is sufficiently supplied,” she said after a speech in Houston.
According to Reuters, she said she had not discussed a potential release with members of the Paris-based IEA, which is charged with coordinating use of the world’s government-held stocks.
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.
Prices for Brent crude tumbled below $ 113 a barrel on news the United States was considering a release from reserves, then erased some of those losses following van der Hoeven’s comments to trade down $ 1.47 at $ 113.80 a barrel by midday Friday in New York.
While Britain and France appeared open to discussing the possibility of action, officials in Japan and South Korea said they saw no reason for a release from reserves.
“It is not as if Japan is short of oil,” a Japanese government source told Reuters.
“Stock releases are not done when the price is high but when supply is insufficient. Supplies are sufficient now.”