Iran condemns IEA decision to release oil stocks

Iran condemns IEA decision to release oil stocks

By | 2011-06-27T10:30:00+00:00 June 27th, 2011|News|0 Comments

Iran condemned on Saturday a decision by oil consumer nations to release strategic crude stocks as politically motivated interference in the market that would not have a sustained impact on prices.

The 12-nation Organization of the Petroleum Exporting Countries (OPEC) — which pumps 30 percent of global oil supplies — opted earlier this month to maintain its output levels.

"The measure by the International Energy Agency in consuming their oil stockpile is meddling in the natural oil market trend and the drop in oil prices will not be sustainable," Iran’s OPEC governor Mohammad Ali Khatibi was quoted as saying by the Oil Ministry Website SHANA.

The 28-member IEA said on Thursday it would release 60 million barrels a day over an initial 30 days to fill the gap created by the disruption to Libya’s output.

After the OPEC meeting, Saudi Arabia said it would unilaterally increase output to meet the needs of the market. Iran said the move was politically motivated as Saudi Arabia was under Western pressure.

"After the United States and Europe failed to raise the organization’s output in the recent OPEC meeting, they used their utmost efforts to lower the global oil price. The consumption of stocks by the IEA to compensate for the oil shortage will push down prices in an artificial way," Mr. Khatibi said.

Mr. Khatibi reiterated Iran’s hawkish position about the current situation of the market.

"The international oil market is not facing any shortage and supply and demand are balanced and any measure to increase output is a political act and maneuver," said Mr. Khatibi.

"The Americans’ meddling in the oil market and the consequent drop in its price is an attempt to influence the outcome of the presidential election next year," Mr. Khatibi said.

The IEA, the energy arm of the 34-nation Organization for Economic Cooperation and Development, has repeatedly called on the OPEC oil cartel to pump more crude to prevent high oil prices threatening the global economic recovery.

Unrest in the crude-producing Middle East and North Africa region, particularly in Libya, amid the so-called Arab Spring revolts has sparked hefty price gains this year

"This supply disruption has been underway for some time and its effect has become more pronounced as it has continued," the IEA said on Thursday.

"The IEA has taken an interventionist approach to the oil supply-demand balance, signaling its frustration at OPEC’s lack of decisiveness to ease supply-side risk in the face on continuing high prices and the impact on the economy," said Westhouse Securities analyst Andrew Matharu.

"The release of 60 million barrels of oil over the next month — equating to two million barrels per day on average — throws down the gauntlet to OPEC in an effort to ease the loss of 1.5 million barrels per day from Libya," he said.

"The majority of the volume injection is likely to be high-quality, sweet crude similar to that produced by Libya," he added.

OPEC has yet to give any official response to the surprise announcement but an unnamed Gulf delegate told Dow Jones Newswires on Thursday that the IEA move was "surprising and unjustified."

Another OPEC delegate added: "We will feel the impact of the drop in prices. It will cause prejudice to oil producers."

The Paris-based IEA said the oil would be taken from its members’ strategic stocks over the next month. The move is only the third time in history that the 28-member group of oil-importing countries has taken such a step.