(Reuters) - The U.S. government reiterated that it could tap its strategic oil reserves to safeguard economic growth, as surging gasoline prices threaten to amp up pressure for action.
While longstanding U.S. policy is to release reserves only in the event of a significant and immediate supply shortage, some analysts say the Obama administration may feel compelled to try to tamp down prices that are being fueled by outages in Libya as well as concerns over Middle East unrest.
The International Energy Agency (IEA) estimates social upheaval in Libya has halted between 850,000 and 1.0 million barrels per day (bpd) of the country's total of 1.6 million bpd.
Top oil exporter Saudi Arabia has pledged to fill any supply void left by Libya. The kingdom was currently pumping around 9.0 million barrels daily and has spare capacity of around 3.5 million bpd, a senior Saudi source told Reuters last week, though that would cut global spare capacity to pump more oil.
Brent crude rose above $117 on Monday, as a counter-offensive by Libya's Muammar Gaddafi against rebels deepened concerns that a civil war is brewing in Africa's largest holder of oil reserves.
As the world's biggest oil consumer, the United States holds the world's largest emergency oil stockpiles in its Strategic Petroleum Reserve (SPR). Four storage sites in Texas and Louisiana hold a total 726.6 million barrels of crude, enough to meet the nation's needs for more than a month.
The White House last month proposed selling $500 million worth of crude oil from the SPR to help cover the costs of managing the emergency stockpile.
The White House did not say how many barrels of reserve oil it planned to sell, but it said it would be a "small amount" of the stockpile's total holdings. At a current market price of $100 a barrel for U.S. crude, the administration would need to sell about 5 million barrels to raise $500 million.
The 28 member countries of the Paris-based IEA, part of the Organization for Economic Cooperation and Development (OECD), hold emergency stockpiles equivalent to at least 90 days of net oil imports, counting both government and industry stocks.
Current levels of government-owned supplies are equivalent to about 1,000 times Libya's pre-crisis daily crude output of 1.6 million bpd. The proportion of crude and products in storage varies across countries.
The IEA can coordinate the release of some of these supplies to world markets in the event of an actual or potentially severe oil supply disruption, but high prices alone cannot trigger the mechanism. The stockpiles are held as government emergency reserves through specialized stockholding agencies, or by placing minimum stockholding obligations on industry.
Total oil stocks at the end of 2009 in IEA member countries amounted to about 4.2 billion barrels when adding commercial inventories, enough to satisfy the world's entire oil demand for almost 50 days. Of that total, 2.6 billion barrels are industry stocks, while emergency stockpiles account for the rest.
IEA executive director Nobuo Tanaka last week sought to calm markets by saying emergency oil stockpiles could be used if needed to counter the disruption from Libya.
"We can release 2.0 million barrels per day for two years. We don't really have to worry too much about the supply side," he said, adding the situation was very different from the one in 2008, when oil prices jumped to nearly $ 150 per barrel.
The biggest disruption ever to oil supplies was related to regime change in the Middle East. It came in 1979 during the Iranian revolution, when as much as 5.6 million bpd of crude stopped flowing, the EIA said.
War in the Middle East also triggered the next three biggest disruptions, during the Arab-Israeli war and Arab oil embargo of 1973-1974, the Iran-Iraq war in the 1980s and the Iraqi invasion of Kuwait in 1990-1991. All of these events at some point halted more than 4 million bpd of output, the IEA says.
Hurricanes Katrina and Rita in 2005, which at the peak disrupted 1.5 million bpd of U.S. oil output, sparked the biggest release of emergency stockpiles yet because the storms also idled refineries in the U.S. Gulf Coast, virtually paralyzing the supply chain of the world's top consumer.
"In assessing the necessity to initiate a co-ordinated action, the IEA considers multiple factors beyond the gross peak supply loss caused by the event," the agency says.
"The decision depends on the expected duration and severity of the oil supply disruption, and also takes into account any additional oil which may be put on the market by producer countries."
In the wake of Hurricane Katrina in early September 2005, the IEA made available 60 million barrels through a combination of emergency stocks, increased U.S. crude output and demand restraint.
The only other event that has prompted the IEA to release stockpiles was the 1991 Gulf War.
China's total strategic petroleum reserves held 178 million barrels by the end of 2010, suggesting that 76 million barrels have been added to the project's second phase, the country's leading oil firm said.
The research unit of China National Petroleum Corp (CNPC) said in January that China's total SPR capacity will increase to 500 million barrels once the third phase is completed. That's equivalent to more than 50 days of the country's current consumption.
However, China Economic Weekly, a magazine run by the official People's Daily, reported in January that China's total SPR capacity could increase to 621 million barrels by 2020 when the three phases of storage facilities are completed.
The filling of China's first phase of 102 million barrels took 30 months since the first batch of tanks was ready in October 2006.
Total storage capacity in the second phase was initially planned at 170 million barrels, but real capacity could top the plan, as local governments have actively lobbied for more projects to improve regional oil supply security.
For the third phase, total capacity of 204 million barrels are planned to be built in underground storage in landlocked regions of China, the world's second-largest oil consumer. Chinese media has said they will be built by 2020.
The IEA and China in 2009 established a hotline to coordinate their response to supply emergencies.
India, Asia's third-largest oil user, aims to build its first strategic oil reserve facility at Visakhapatnam in southern India by October this year.
Reporting by Alejandro Barbajosa and Jim Bai and Aizhu Bhen in Beijing; Editing by Ramthan Hussain