IEA ready to tap reserves after alert on ‘oil crisis’
The world faces an “oil crisis” and the International Energy Agency (IEA) stands ready to release emergency stockpiles even as the biggest consumers discuss measures to contain spiralling demand.
By Bloomberg |
The world faces an ���oil crisis��� and the International Energy Agency (IEA) stands ready to release emergency stockpiles even as the biggest consumers discuss measures to contain spiralling demand.
Executive director Nobuo Tanaka said in Tokyo: ���Any major oil plant accident can cause a supply disruption. We at IEA are monitoring the oil market and preparing ourselves to call for the release of strategic petroleum reserves at any time in the event of a major disruption.���
Consumption in China and India ��� the world���s fastest-growing major economies ��� has helped drive crude oil prices to ���abnormally high��� levels above $130 a barrel, he added. The US, Japan and 25 other rich countries advised by IEA have discussed stopgap measures to reduce consumption, including lowering speed limits and restricting cars in cities.
���We can call it an ���oil crisis��� given the current price and that it continues to climb even after global efforts to cut consumption,��� said Mr Tanaka. ���We see a critical, structural issue in the global oil market, where supply growth isn���t catching up with demand,��� he added. Unlike the oil crisis in the 1970s, which was driven by supply restraints from the Middle East, the current situation is fuelled by soaring demand. Speculative investment in commodities is also a driving force behind record prices.
Crude oil futures have doubled in the past 12 months and investors looking to hedge against the dollar���s drop helped push oil, gold, corn and gasoline to records this year.
The US Commodity Futures Trading Commission (CFTC) set up an interagency task force to evaluate developments in commodity markets, including the role of speculators, according to the commission on Tuesday.
CFTC held talks with the UK Financial Services Authority about the possibility of introducing limits on the positions traders can take in London���s oil markets, according to agency.
���I want CFTC to set new rules and regulations that will help increase transparency of the oil market. It���s necessary to some extent to find out who invests what kind of money in which markets,��� said Mr Tanaka.
He will take part in the Group of Eight industrialised nations��� finance ministers meeting this weekend in Osaka, Japan.
IEA member states are required to hold oil stockpiles equivalent to no fewer than 90 days of the prior year���s net imports. The agency calls on countries to release emergency reserves of oil if supply is
threatened.
In September 2005, all IEA member countries ��� in cooperation with the EU ��� agreed to offer a total of 60 million barrels of oil and oil products to the market within 30 days as a response to disruptions caused by Hurricane Katrina, which hit the US Gulf.
The US Congress introduced a national speed limit of 88 km an hour in effect from 1974 to 1984 to conserve fuel in the face of the 1973 oil crisis.
Executive director Nobuo Tanaka said in Tokyo: ���Any major oil plant accident can cause a supply disruption. We at IEA are monitoring the oil market and preparing ourselves to call for the release of strategic petroleum reserves at any time in the event of a major disruption.���
Consumption in China and India ��� the world���s fastest-growing major economies ��� has helped drive crude oil prices to ���abnormally high��� levels above $130 a barrel, he added. The US, Japan and 25 other rich countries advised by IEA have discussed stopgap measures to reduce consumption, including lowering speed limits and restricting cars in cities.
���We can call it an ���oil crisis��� given the current price and that it continues to climb even after global efforts to cut consumption,��� said Mr Tanaka. ���We see a critical, structural issue in the global oil market, where supply growth isn���t catching up with demand,��� he added. Unlike the oil crisis in the 1970s, which was driven by supply restraints from the Middle East, the current situation is fuelled by soaring demand. Speculative investment in commodities is also a driving force behind record prices.
Crude oil futures have doubled in the past 12 months and investors looking to hedge against the dollar���s drop helped push oil, gold, corn and gasoline to records this year.
The US Commodity Futures Trading Commission (CFTC) set up an interagency task force to evaluate developments in commodity markets, including the role of speculators, according to the commission on Tuesday.
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CFTC held talks with the UK Financial Services Authority about the possibility of introducing limits on the positions traders can take in London���s oil markets, according to agency.
���I want CFTC to set new rules and regulations that will help increase transparency of the oil market. It���s necessary to some extent to find out who invests what kind of money in which markets,��� said Mr Tanaka.
He will take part in the Group of Eight industrialised nations��� finance ministers meeting this weekend in Osaka, Japan.
IEA member states are required to hold oil stockpiles equivalent to no fewer than 90 days of the prior year���s net imports. The agency calls on countries to release emergency reserves of oil if supply is
threatened.
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In September 2005, all IEA member countries ��� in cooperation with the EU ��� agreed to offer a total of 60 million barrels of oil and oil products to the market within 30 days as a response to disruptions caused by Hurricane Katrina, which hit the US Gulf.
The US Congress introduced a national speed limit of 88 km an hour in effect from 1974 to 1984 to conserve fuel in the face of the 1973 oil crisis.
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