WASHINGTON (Reuters) - Oil consuming nations reacted with dismay to OPEC’s failure to agree an increase in output on Wednesday, with the International Energy Agency urging key members to hike production anyway and an influential U.S. lawmaker suggesting Washington may tap strategic stocks.
The quick response to an extraordinary breakdown in OPEC talks in Vienna underscored the deep unease within the industrialized world about the danger of $100-plus oil prices to a fragile world economy, and the increasingly politicized effort to find new ways to fight them.
The Paris-based IEA, the West’s energy watchdog, said in a statement that it was disappointed the Organization of the Petroleum Exporting Countries had failed to agree to boost output, but held out hope that supplies would rise anyway.
Saudi Arabia, which had pushed for a hike, has made clear it will pump more unilaterally.
“Of course what really matters is actual supply, which should move in line with seasonally rising demand, and we urge key producers to respond accordingly,” the IEA said.
It also once again made oblique reference to the only real tool it has at its disposal to battle high prices — the 1.5 billion barrels of government held oil inventories that it coordinates on behalf of its 28 members, a reserve meant to be used only in the event of an emergency outage.
“The IEA stands ready to work with its member governments and others to help ensure that markets are well supplied,” the agency said in an email.
The call was quickly matched by a prominent U.S. lawmaker, Democrat Representative Edward Markey, who asked the Obama Administration to tap America’s strategic oil reserves and put more pressure on the oil cartel.
“OPEC, led by Iran and Venezuela, has snubbed its nose at the United States and the rest of the Western nations addicted to OPEC oil,” said Markey, the top member of the minority party on the Natural Resources Committee in the House of Representatives, said in a release.
“This is a clear sign that America must engage in a long-term plan to break our ties to this OPEC-controlled market, and prepare to deploy America’s oil reserves now to head off an economic collapse from continued high gas(oline) prices.”
President Barack Obama has been under pressure from Republicans and the public to bring down gasoline prices. The pressure could rise if oil stays above $100 a barrel as next year’s elections approach.
Oil traded in London rose more than $1 to above $118 a barrel after the OPEC meeting and U.S. oil rose more than $2 to above $101.
On Wednesday, White House deputy national security adviser Michael Froman said at an oil conference the United States is concerned about how high oil prices are hurting the economy and reiterated the administration’s policy that it has tools to deal with the high prices.
Obama said in March that the administration has a plan “teed up” to tap the 727 million barrel Strategic Petroleum Reserve, should there be significant supply disruptions or shifts in the market.
Additional reporting by Muriel Boselli in Paris, and Tom Doggett and Jeff Mason in Washington; Editing by Russell Blinch and Marguerita Choy