3 Min Read
By Matt Falloon
LONDON, Aug 29 (Reuters) - Finance ministers are likely to discuss oil markets at International Monetary Fund meetings in October, a UK Treasury source said on Wednesday, after the G7 group of industrialised nations said they may tap strategic reserves to calm prices.
"The issue of oil markets is likely to feature in the international meetings in October," the source told Reuters.
The United States, France and Italy are keen to see a release of oil reserves to bring down fuel prices and improve prospects for the global economy. Britain has also said it could be in favour of such a move but Canadian officials and, to some extent, those from Germany and Japan, have their doubts.
The issue could be raised at a G20 session at the IMF meeting in Tokyo in mid-October, which will give Western negotiators the chance to meet their Saudi Arabian counterparts.
That discussion could see Saudi Arabia come under further pressure to ensure adequate oil supply, although the International Energy Agency (IEA), which represents 28 oil consuming nations, has voiced opposition to any stock release, arguing the market is well supplied.
Finance ministers from the Group of Seven group of developed economies urged oil producing countries on Tuesday to raise output in a joint statement which also raised the possibility of a strategic oil reserve release.
British finance minister George Osborne took time out from a U.S. vacation last week to help broker the phrasing of the G7 statement which had to be toned down to incorporate several differences of opinion.
With Canada opposed to a release of oil, even if prices remain high with large swathes of the global economy in the doldrums, a co-ordinated G7 tapping of reserves is seen as unlikely - but a strong joint G20 statement at the IMF could help cool prices.
The UK source said the G7 statement showed the idea of releasing stocks was being given serious consideration.
The United States and Britain discussed a release of oil in March and those plans have been dusted off this month, with speculation mounting that such action could come before the U.S. presidential election in November.
Brent crude oil traded around $112 per barrel on Wednesday as Hurricane Isaac, which has hit land in Louisiana, left U.S. Gulf Coast oil production facilities without significant damage.
Fears about supply disruption from the hurricane sent Brent to a high of $115.50 per barrel on Monday while the price of U.S. oil has risen by about eight percent this month - the biggest monthly rise since February.