IEA Announces Emergency Oil Stockpile Release; Crude Plunges
Oil Plunges
Shane Bevel/Bloomberg
Oil pipelines feed into 575,000-barrel capacity storage tanks at the Enbridge Inc. Cushing Terminal in Cushing, Oklahoma.
Oil pipelines feed into 575,000-barrel capacity storage tanks at the Enbridge Inc. Cushing Terminal in Cushing, Oklahoma. Photographer: Shane Bevel/Bloomberg
June 23 (Bloomberg) -- Fadel Gheit, an analyst at Oppenheimer & Co., talks about the International Energy Agency's announcement today that it will release 60 million barrels of oil from emergency stockpiles to alleviate possible shortages following the loss of Libyan crude. It is the third time the Paris-based agency has coordinated the use of emergency stockpiles since the agency was founded in 1974. Gheit speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)
June 23 (Bloomberg) -- Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., talks about Greece's debt crisis. El-Erian, speaking with Betty Liu, Michael McKee and Jon Erlichman on Bloomberg Television's "In the Loop," also discusses the release of emergency oil stockpiles and the U.S. economy. (Source: Bloomberg)
Oil Prices
Mary Altaffer/AP
Traders work the crude oil options pit at the New York Mercantile Exchange in New York.
Traders work the crude oil options pit at the New York Mercantile Exchange in New York. Photographer: Mary Altaffer/AP
International Energy Agency Executive Director Nobuo Tanaka. Photographer: Haruyoshi Yamaguchi/Bloomberg
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 percent, 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 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.
To contact the reporters on this story: Tara Patel at tpatel2@bloomberg.net Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
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