IEA Urges Oil Producers to Lift Output
Source: New York Times, Matthew Saltmarsh (5/19/11)
"There's an urgent need for additional supplies on a more competitive basis."
Expressing "serious concern" about elevated crude prices, the International Energy Agency on Thursday called for an increase in world oil production. It was an unusual move that highlighted consumer countries' frustration at the failure of oil-producing nations to lift output in the face of rising demand and tighter supply.
Analysts suggested that the agency, which usually does not comment on oil producers' policies, was signaling a shift in stance to become more confrontational toward the main producers over their failure to increase the flow of oil to world markets.
The call also appears to be a move by the IEA, which represents 28 advanced economies, to distance itself from the period under its departing chief, Nobuo Tanaka. It was seen by many as too accommodating to Saudi Arabia and too content to accept the OPEC's narrative of blaming speculation, rather than market fundamentals, for high prices.
The agency's monthly Oil Market Report has recently been warning about tightening market conditions as supply hasn't caught up with strong demand.
As global demand for oil typically increases from May to August, "there is a clear, urgent need for additional supplies on a more competitive basis to be made available to refiners to prevent a further tightening of the market," it said.
The agency's board also said it was prepared "to consider using all tools that are at the disposal of I.E.A. member countries." That was seen by analysts as a veiled warning to OPEC that the agency could, in an extreme case, call for its member countries to agree to release emergency oil stocks if the market situation deteriorated.