WESTERN NATIONS agreed to release oil from emergency stockpiles for the third time in history yesterday, sending oil prices tumbling and providing some support to a faltering global economy.
The surprise move was a shot at the oil-producing cartel Opec, which failed to raise production at a meeting on June 8th, and was aimed at replacing supply lost from Libya. The International Energy Agency said it will release 60 million barrels over the next month, half coming from the biggest oil consumer, the United States.
The intervention by the agency was cast by many analysts as an important shift in energy policy by the industrialised nations of the Organization for Economic Co-operation and Development (OECD) that make up the agency’s 28 members.
By pinning the action to economic concerns, western officials appeared to confirm a widely held view in oil markets that reserves could now be used to drive down prices and shake out speculators -- not just respond to surprise disruptions.
“We would suggest that today’s action represents the first genuine, offensive use of the OECD’s ‘defensive oil weapon’ to send an unforgettable message to Opec and also to non-commercial players in the crude markets,” said Kevin Book, analyst at Clearview Energy in Washington. – (Reuters)
