IEA, OPEC Clash over Oil Output
Source: Reuters, Emma Farge and Dmitry Zhdannikov (1/18/11)
"IEA accuses Saudi Arabia of stealthily boosting output to cool an oil price rally."
Tensions between oil exporter group OPEC and the agency, representing industrialized consumers, have risen as Western countries put pressure on the Saudis and their allies, the only producing nations with spare capacity, to meet unexpectedly robust demand that has driven crude up near $100 a barrel.
"It appears Saudi Arabia has been making more crude available to the market in the past six months, judging by export data from independent tanker trackers," the IEA, which advises 28 industrialized countries on energy policy, said.
On Monday the IEA said current oil prices were alarming. On Tuesday OPEC's secretary general, Abdullah al-Badri, produced an unusually harsh statement criticizing the IEA for inconsistency by imposing taxes, then asking OPEC to curb prices to safeguard the world economy.
"In 2009 when the oil price was lower, the IEA had advised its members that they needed to increase petroleum taxes."
"So why today, when they are complaining that oil prices are too high, are they not advising their members to reduce taxes?"
OPEC says it believes the market is well supplied, but some analysts say street protests near OPEC members' borders in countries such as Tunisia, partly sparked by high food and fuel prices, may encourage the group to act soon to raise output.
"OPEC is likely concerned that the instability could spread to other North African (Algeria, Libya, Egypt) and Middle Eastern (Jordan, Yemen) countries suffering similar internal problems," said David Wech from JBC Energy in a note.
"Some OPEC members might start to question the hawkishness on oil prices illustrated over recent months," he added.