Thursday Sep 28 2000

IEA to convene emergency meeting on oil

PARIS THE INTERNATIONAL Energy Agency on Wednesday said its governing board would meet on October 4 to discuss the state of the global oil market, and the degree to which the latest increase in production by oil-exporting countries would have cooled prices.

However, the Paris-based agency said it saw no need for the sale of oil from the strategic reserves of its members. "There is no need for a collective stock draw," IEA official Fiona Davis said.

Oil markets are closely watching whether Europe will follow the lead of the US which said last week it would release 30 million barrels of crude oil from its emergency reserves to soothe fears of fuel shortage.

Spanish Prime Minister Jose Maria Aznar met French President Jacques Chirac on Tuesday to press his case that the 15-nation EU should also release oil from stocks intended for use in case of supply disruptions.

Chirac, whose country holds the EU's rotating presidency, agreed to back Aznar, but put off consideration of the Spanish initiative until an EU summit in the French town of Biarritz October 13 and 14.

This gives some leeway for prices to fall, thus easing the political pressure to act fast. Soaring prices triggered off protests across Europe this month, with many consumers blaming Europe's governments for not acting decisively to reduce prices.

Crude prices already tumbled off record highs after the US announcement last week. Davis said the IEA believed the oil should only be tapped if there was a sudden cut in supply, whereas the current problems relate to price and political pressure.

She said next Wednesday's meeting would be "a collective discussion" of the latest developments in the oil market. The discussion over the possible use of strategic reserves comes as the Organization of Petroleum Exporting Countries meets in Venezuela.

Earlier this month, Opec decided to boost production by 800,000 barrels a day starting in October, to ease pressure on prices.

Opec president and Venezuelan oil minister Ali Rodriguez on Tuesday said at least one European Union country was modestly tapping its own reserves. He declined to elaborate. - AP

http://www.economictimes.com/today/28worl04.htm

-- Martin Thompson (mthom1927@aol.com), September 27, 2000