IEA chief criticizes artificial tightening of energy markets – .

IEA chief criticizes artificial tightening of energy markets – .

Oil pump jacks are pictured in the Kern River oil field in Bakersfield, California.
Jonathan Alcorn | Reuters
The head of the world’s leading energy authority said some countries had failed to take a useful stance to calm soaring oil and gas prices, criticizing the “artificial tightness” of energy markets.
« [A] The factor that I would like to highlight that has caused these high prices is the position of some of the major suppliers of oil and gas, and some of the countries have not, in our opinion, taken a useful position in this context ”, Fatih Birol , executive director of the International Energy Agency, said Wednesday during a press webinar.

“In fact, some of the main tensions in today’s markets can be seen as artificial tension… because in oil markets today, nearly 6 million barrels per day of unused production capacity falls on the major producers, the countries of the world. OPEC +. “

His comments come as energy analysts assess the effectiveness of a commitment by the United States to release oil from strategic reserves to thwart soaring fuel prices.

In the first such move, President Joe Biden announced a coordinated release of oil between the United States, India, China, Japan, South Korea, and the United Kingdom.

The United States will release 50 million barrels of the strategic oil reserve. Of that total, 32 million barrels will be a trade in the next few months, while 18 million barrels will be an acceleration of a previously authorized sale.

OPEC and non-OPEC producers, an influential group often referred to as OPEC +, have repeatedly rejected calls by the United States to increase supply and lower prices in recent months.

Birol said the IEA recognizes the announcement made by the United States alongside other countries, acknowledging that soaring oil prices have placed a burden on consumers around the world.
“It also puts additional pressure on inflation at a time when the economic recovery remains uneven and still faces a number of risks,” he added.

Birol said he wanted to make it clear that this was not, however, a collective response from the IEA. The Paris-based energy agency only acts to tap energy stocks in the event of a major supply disruption, he said.

“A new unexplored price war”

Oil prices have jumped more than 50% since the start of the year, reaching multi-year highs as demand outstrips supply. The momentum behind the price rally even tempted some forecasters to predict a return to $ 100 a barrel of oil, although not everyone agrees.

International benchmark Brent crude futures traded at $ 82.27 per barrel Monday afternoon in London, down around 0.1%, while West Texas Intermediate crude futures came in at $ 78.47, little change for the session.

“A new type of unexplored price war is brewing in the oil market,” Louise Dickson, senior oil markets analyst at Rystad Energy, said Wednesday in a research note.

“The world’s largest oil consumers have pledged an unprecedented and relatively large release of strategic reserves into the market to quell high oil prices amid a pandemic recovery. “

Rystad Energy said that if the oil due to be released from the United States, China, India, Japan, South Korea and the United Kingdom starts as early as mid-December, it may be enough to exceed demand for crude starting next month.

“This raises the question of how strategic the timing is for Biden, Xi and others if a fundamental reprieve is already imminent in 1Q22,” Dickson said.

“The publication may be too much, too late, as the oil market was the most tense and needed supply relief in September,” she added.

– CNBC’s Pippa Stevens contributed to this report.


Please enter your comment!
Please enter your name here