Oil stockpiles will only be available as a last resort

Riyadh: The International Energy Agency (IEA) will discuss the impact of supply disruption in Libya at its regular meeting this week, vowing to only release oil from emergency stockpiles as a last resort.

Executive Director Nobuo Tanaka said that tthe Organisation of Petroleum Exporting Countries (OPEC) would act first to fill any gap from member Libya with its own cushion of spare output capacity. Only after that would the IEA contribute.

"With the IEA stocks, we can produce two million barrels per day for two years but these are stocks and once we use them, they will run out, unlike spare capacity," Tanaka said. "That's why the stocks are for great emergencies.

"So if there are disruptions in Libya and Opec steps in with an extra one million barrels, then the gap is covered."

Opec has around five million barrels per day of spare output, mostly held by Saudi Arabia, against Libya's production of roughly 1.5 million bpd.

"The IEA stocks will only be used if there is a need to fill an additional gap," Tanaka said.

Tanaka met Saudi Arabian Oil Minister Ali Al Naimi and other Opec oil ministers at the International Energy Forum in the Saudi capital on Tuesday.

Al Naimi gave him reassurances Saudi Arabia and Opec would supply extra oil if there were a supply shortage. For now, he said, the market had enough oil.

Fatih Birol, IES chief economist, on Tuesday said the price of oil is entering a "dangerous zone".

"The high price is definitely not good news," Birol said. Brent crude jumped almost four per cent above $110 per barrel in yesterday's trading, while WTI is now nearing the $100 mark.