The Obama administration hasn’t made a decision on whether to release oil from the Strategic Petroleum Reserve nor made any specific proposal to allies, a White House official said.
The option of using the reserve remains under consideration, the official said on condition of anonymity.
The administration’s response followed statements in Paris by French Industry Minister Eric Besson that the U.S. has proposed releasing fuel from strategic stockpiles to curb rising oil prices.
The French government “welcomed the proposal,” Besson told reporters in Paris today after a weekly cabinet meeting.
Rising oil costs threaten to put a crimp in the recovery and price pressure may increase as the U.S. and European Union are cutting purchases of crude from Iran as part of sanctions against the Islamic Republic. Iran is the second-largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia.
Oil fell for the first time in four days after U.S. stockpiles climbed to the highest level in almost 20 months and on speculation that Western countries may tap emergency reserves. Crude oil for May delivery fell $2.28, or 2.1 percent, to $105.05 a barrel at 12:29 p.m. on the New York Mercantile Exchange.
The average U.S. retail price of a gallon of regular gasoline is $3.91, up from $3.58 a year ago, according to an American Automobile Association survey. The higher cost has become an issue in the election campaign as President Barack Obama seeks a second term.
Charles McConnell, acting assistant energy secretary, told the House Appropriations subcommittee on Energy and Water Development yesterday that using the reserve “has been in consideration for some time, and no decision has been made.”
Tapping reserves was a topic discussed by President Barack Obama and U.K. Prime Minister David Cameron when the British leader was in the U.S. earlier this month.
“France is accompanying the U.S. and U.K. in the IEA consultation, which could allow the release of strategic oil reserves in order to break the rising price spiral,” she said.
The Paris-based IEA coordinated the release of 60 million barrels of crude and oil products in June after Libyan output was disrupted by an armed uprising against Muammar Qaddafi. The agency also made supplies available during the 1991 Persian Gulf War and when Hurricane Katrina damaged oil rigs and refineries in the Gulf of Mexico in 2005.
The European Union decided in January to ban oil imports from Iran starting July 1 as part of efforts to ratchet up pressure on the Persian Gulf nation’s nuclear program.
The U.S. Energy Department in a report earlier this month said that excluding Iranian oil from the global market would increase the shortfall between worldwide supply and demand by about 3 million barrels a day.
Saudi Arabia can boost oil output by 25 percent beyond the almost 10 million barrels a day it already produces, even as crude markets are oversupplied, Ali al-Naimi, the country’s oil minister, said last week.
To contact the reporter on this story: Roger Runningen in Washington at firstname.lastname@example.org