June 16, 2011 / 9:51 AM / in 7 years

UPDATE 1-IEA ready to act to ensure extra oil supply-Tanaka

* Questions how quickly Saudi Arabia can ramp up supply

* OPEC output dented by Libya conflict

By Melissa Akin

ST PETERSBURG, Russia, June 16 (Reuters) - The International Energy Agency, the West’s energy watchdog, stands ready to release strategic reserves of crude oil to ensure adequate supply and support the global economy, Executive Director Nobuo Tanaka said on Thursday.

“We are ready to act at any time if necessary,” Tanaka told a news conference in the Russian city of St Petersburg.

The IEA’s developed-world members have 1.5 billion barrels in strategic oil stockpiles that they can mobilise if OPEC’s largest producer, Saudi Arabia, is unable to ramp up supply fast enough to balance markets.

Speaking after the IEA released its Medium-Term Oil and Gas Market Report, Tanaka said the key question was “how fast and how much” Saudi Arabia could bring more barrels to market.

Saudi media have reported that Riyadh will raise output to 10 million barrels per day from 8.8 million bpd in May after an OPEC meeting in Vienna last week ended without agreement to raise production quotas.

“We are concerned at the speed OPEC can provide (more oil) to the market,” Tanaka said. “We believe in what they are saying, but how fast and how much?”

Tanaka said current oil prices of $120 per barrel were detrimental to world economic growth, and further price increases would increase the risk of a so-called hard landing.

Such an outcome would, he said, probably be less severe than the economic slump of 2008-09, which followed an increase in oil prices to nearly $150 per barrel.

Higher demand and reduced spare OPEC capacity will leave oil markets under greater strain between now and 2012 than previously thought, the IEA said in its medium-term report.

It raised its five-year global oil demand forecast by an average of 700,000 bpd compared with the previous medium-term report issued in December. (ID:nLDE75F0JR] (Writing by Douglas Busvine; editing by James Jukwey)

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