Oil pumping cranes are photographed at the Kern River oil field in Bakersfield, California.
Jonathan Alcorn | Reuters
The head of the world’s leading energy authority said some countries had failed to take a beneficial stance to calm high oil and gas prices, criticizing the “artificial tightening” of energy markets.
“[A] The factor that I would like to stress that caused the price hike is the situation of some major oil and gas suppliers, and some countries, in our opinion, have not taken a beneficial position in this context,” Fatih Birol, Executive Director of the International Energy Agency, said on Wednesday during a press conference via Internet.
“In fact, some of the major pressures in today’s markets can be viewed as artificial tightness…because today’s oil markets we are seeing nearly 6 million barrels per day of spare capacity resting with the major producers, the OPEC+ countries.”
His comments come as energy analysts assess the effectiveness of the US-led pledge to remove oil from strategic reserves to hamper fuel price hikes.
In a first of its kind, President Joe Biden announced a coordinated launch of oil between the United States, India, China, Japan, South Korea, and the United Kingdom.
The United States will release 50 million barrels of Strategic Petroleum Reserve. Of this total, 32 million barrels will be exchanged over the next several months, while 18 million barrels will be an acceleration of the previously authorized sale.
OPEC and non-OPEC producers, an influential group often referred to as OPEC+, have repeatedly rejected US calls for more supply and lower prices in recent months.
Birol said the IEA recognized the announcement that the US had made in parallel with other countries, acknowledging that high oil prices had burdened consumers around the world.
He added that it is putting additional pressures on inflation at a time when the economic recovery remains uneven and still faces a number of risks.
Birol said he wanted to make it clear that this was not a collective response from the IEA. He said the Paris-based energy agency was only working to tap into energy stocks in the event of a major supply disruption.
A new and indefinite price war
Oil prices have jumped more than 50% year-to-date, reaching multi-year highs as demand outpaced supply. Even the momentum behind the price rally has tempted some forecasters to predict a return to $100 a barrel of oil, although not everyone shares this view.
Brent crude futures were trading at $82.27 a barrel on Monday afternoon in London, down about 0.1%, while West Texas Intermediate crude futures settled at $78.47, little changed during the session.
“A new and unspecified kind of price war is brewing in the oil market,” Louise Dixon, chief oil markets analyst at Rystad Energy, said on Wednesday in a research note.
“The world’s largest oil consumers have pledged an unprecedented and relatively large release of strategic reserves into the market to calm high oil prices amid the pandemic recovery.”
Rystad Energy said that if oil from the United States, China, India, Japan, South Korea and the United Kingdom are due to be launched in mid-December, it could be enough to surpass demand for crude as soon as next month.
“This begs the question of how much of a timing strategy from Biden, Xi and others will be if the primary delay is around the corner in the first quarter of ’22,” Dixon said.
“The release could be too much, too late, as the oil market was very tight and needs to ease supply in September,” she added.
CNBC’s Pippa Stevens contributed to this report.