U.S. oil business, OPEC members slam crude release

WASHINGTON (Reuters) - The U.S. oil industry and major OPEC producers on Thursday slammed the international plan by crude consumers to release emergency petroleum reserves saying there is no supply emergency.

Industry group American Petroleum Institute said the Obama Administration's plan to release 30 million barrels of oil from the Strategic Petroleum Reserve, as part of a 60 million barrel release coordinated with the International Energy Agency, was "ill-timed."

"The SPR was intended to be used for supply emergencies," said API spokesman Bill Bush. "There is no supply emergency."

The U.S. Energy Department said the loss of oil from Libya played into the decision to release the oil. But U.S. oil supplies are not low right now, despite oil prices trading recently at above $90 a barrel.

U.S. crude oil stockpiles last week were only 1.3 million barrels below the level last year, holding at 363.8 million barrels, U.S. Energy Information Administration, the statistics branch of the Energy Department, said on Wednesday.

OPEC delegates from Iran and two Gulf states said coordinated release by the United States and the 28-member IEA was unjustified.

"I don't know how to justify this interference in the market," a delegate told Reuters on condition of anonymity.

Iran, the current holder of the OPEC presidency, led opposition to a Saudi-led proposal to raise oil production at this month's OPEC meeting in Vienna.

The United States said Thursday it will work with the International Energy Agency to release a coordinated 60 million barrels of crude oil.

Gulf OPEC delegates, who had backed the Saudi proposal for higher output, also took issue with the plans to release oil.

"The oil price hasn't shot up to $150. There is no reason to do this. The market is not short of supply. Kuwait and Saudi Arabia have been raising production, but there have not been many buyers. The IEA is just playing politics with the U.S." one Gulf delegate told Reuters.

Energy stocks got hit after the IEA news. The S&P energy sector dropped 2.7 percent, while Chevron Corp fell 3.2 percent to $97.83 and was the biggest decliner on the Dow. Exxon Mobil Corp took off 2.9 percent at $77.51.

(Reporting by Timothy Gardner, Ayesha Rascoe, and Amena Bakr in Riyadh; Editing by Lisa Shumaker)