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WTI Weekly
IEA collective action – June 23, 2011 Frequently asked questionsHow many times has the IEA undertaken such a “collective action”? When was the last time? How exactly will stocks be made available to the market in each of your member countries? What mechanism is used? How much time will it take for these stocks to become available? How much oil will each country release? Will each country release the same proportional amount, or will some countries do more? How is that decision made? THas the IEA consulted with OPEC or Saudi Arabia on this decision? Would this IEA action not discourage Saudi Arabia and other willing OPEC members from increasing oil production? I thought the IEA only does this for supply disruptions in excess of 7%. The 1.5 million-barrels-a-day disruption from Libya doesn’t seem all that much, given that global demand is around 88 mb/d, so why go to all the trouble? If the disruption from Libya is 1.5 million barrels per day, why are the IEA member countries releasing 2 million barrels per day? Libyan supplies have been off the market since February. Why are you only doing this now? Are IEA countries not putting at risk their capacity to react to more serious oil disruptions that may happen in the coming months considering geopolitical uncertainties in MENA countries?No; Several analysts say this is only likely to have a short-term effect on the market, and that prices will be higher in a month’s time. What’s your response? Will you extend this by 30 days? How will you decide? Isn’t the IEA effectively doing this to counter high prices – and in that sense isn’t this fundamentally different from a traditional release in response to a supply disruption? Doesn’t this therefore set a bad precedent, by making the IEA a market manipulator? |
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