OGJ Oil Diplomacy Editor
LOS ANGELES, June 28 -- Abdullah El-Badri, secretary general of the Organization of the Petroleum Exporting Countries, urged the International Energy Agency to reverse its earlier decision to release 60 million bbl of oil over the coming 30 days.
“I hope this practice will be stopped and stopped immediately,” El-Badri told a news conference in Vienna after the scheduled 8th ministerial-level meeting of the energy dialogue between OPEC and the European Union.
“We don't see a good reason to release this quantity, and I hope the IEA will refrain from using this practice,” El-Badry said, also telling the Kuwait News Agency that IEA had wronged OPEC with its decision to release the oil.
"The agency did not give OPEC an opportunity to increase its output before deciding to draw from the strategic reserves of its 28 members," he said, noting that such a move is justifiable only as “a final resort in extreme emergencies” and not to control prices.
“As international organizations, IEA, which represents the interests of consumers, and OPEC, which represents producers, have to work together for the stability of the market and to maintain fair prices,” El-Badri said.
His remarks were in line with those of Iran’s OPEC Gov. Mohammad Ali Khatibi who blasted the IEA’s decision to release the strategic reserves as a politically motivated intervention in “the ordinary function” of the oil market.
“Following the failure to bring down the prices at 159th ministerial meeting of OPEC in June 8, the US and Europe are using all the means to push oil prices lower,” he said ahead of the meeting with the EU.
Tamas Fellegi, president of the EU's energy council and also Hungary's development minister, said there is “obviously” a disagreement on the issue of the IEA’s decision.
"Even if the IEA made this action, it has to remain extraordinary and limited in time, this is very important, and should not undermine the cooperation between the EU and OPEC and should not disrupt the market mechanisms," Fellegi said.
That view matched remarks by IEA Executive Director Nobuo Tanaka, who told reporters in London the agency took its decision as a short-term measure to ensure the availability of supplies while awaiting a production increase by Saudi Arabia.
“We are simply saying we will just fill the gap before OPEC or Saudi is going to produce supplies for the market,” said Tanaka. "We are just filling the gap—we can't continue forever."
Tanaka expressed confidence that Saudi Arabia—which he said has “about 3 million b/d of spare capacity”—would produce more, as it had pledged, but that the extra supplies might take "a couple of weeks" to reach the market.
"We are very sure this tightening of the market will happen in July, August when refinery maintenance is over," said Tanaka, who repeated that the current stocks release was for 30 days after which the agency would reassess the market.
Kuwait’s Minister of Oil Mohammad al-Busairy shared Tanaka’s view of tightening supplies and said the global oil market will be in “dire need” for some 2 million b/d of oil during the third quarter, with demand falling to around 1.5 million b/d in the last quarter of the year.
Noting Saudi Arabia, Kuwait, and the UAE alone have the necessary spare capacity to meet the growing demand, al-Busairy said his country should take advantage of the situation while prices are high.
“We should not miss such opportunity, particularly under the soaring prices, and the increasing demand in the market, and we have the ability to meet such demand,” al-Busairy said, adding, “This is an output policy in the interest of our country, and we are following it."
OPEC has not officially issued a statement concerning IEA’s decision to release oil from its reserves.
Contact Eric Watkins at firstname.lastname@example.org.