BRUSSELS/MEXICO CITY (Reuters) - Oil consuming nations have no need to release stockpiles as they do not face a supply crunch, EU officials and the agency for consumers said on Wednesday after Washington announced it may use stocks to stem soaring gasoline prices in an election year.
Oil prices hit a 10-month high last week in dollar terms and an all-time high in euros and British pounds amid fears over a loss of Iranian oil supplies and a Israeli attack on the Islamic Republic’s nuclear installations.
The rally in oil prices is reviving fears of a global recession as consumers tighten their belts and represents a major challenge for politicians seeking re-election, including U.S. President Barack Obama, who is watching U.S. gasoline prices pushing towards record levels of $4 a gallon.
U.S. Energy Secretary Steven Chu said this week Washington was considering releasing stockpiles and was consulting with the energy adviser to industrialized nations, the International Energy Agency (IEA), to which the United States belongs.
“We’re very concerned about what’s happening in Iran. So we’re working with the IEA,” Chu said on Tuesday.
But the IEA and the European Union said there was little appetite for a repeat of last year’s coordinated release of 60 million barrels of oil stocks, which was triggered by a loss of Libyan supply because of a civil war.
Washington is capable of unilaterally releasing stockpiles but this would go against the spirit of the latest coordinated releases in response to supply disruptions including the Libyan crisis last year and Hurricane Katrina in 2005.
Unilateral action could also allow Obama’s political rivals to accuse him of using oil stockpiles to help his election chances.
“No discussions,” Maria van der Hoeven, the executive director for the IEA, which sets energy policies and manages stockpiles for developed nations, told Reuters in Mexico City.
She said she had not been in touch with the United States.
“Countries like the United States have their own strategic reserves and can use them after consultation with the IEA,” she said.
Both Chu and Treasury Secretary Timothy Geithner have said the United States was considering a release from the Strategic Petroleum Reserve (SPR).
“I have only seen what’s in the newspaper about what Secretary Chu and Secretary Geithner are saying, that’s all I know,” said van der Hoeven.
The Obama administration came under pressure this month to release stocks again because tensions around Iran’s nuclear program have propelled oil markets higher.
But van der Hoeven and EU officials said that, unlike a year ago during the Libya crisis, the current oil price spike could not be explained by a loss of supply - the only circumstance in which the IEA is meant to release its stocks.
“What I see at this moment is there are huge stocks in the United States and what I do see is OPEC, especially Saudi Arabia, bringing more oil into the market,” van der Hoeven said.
A European Commission spokeswoman said the block also does not foresee a shortage of oil because of its forthcoming ban on shipments of crude from Iran.
“EU stocks are to be used in case of a serious disruption,” the spokeswoman said. “We don’t have a situation of shortage. EU member states either stopped purchasing oil from Iran, (while) others are reducing their purchases.”
The EU will ban imports of Iranian crude from July 1. Many of Iran’s big customers on the continent have already cut back sharply or stopped buying altogether in the run-up to the embargo.
“By law, the oil reserves can only be released in the event of a disruption of the oil supplies, and there is nothing of the kind at the moment,” a spokeswoman for Germany’s Economy Ministry said last week.
Writing by Dmitry Zhdannikov; Editing by Anthony Barker