Oil prices are still unacceptably high at a time when the global economic recovery remains fragile, International Energy Agency chief economist Fatih Birol said in an interview ahead of a key gas report Tuesday, calling on key oil producing countries such as Saudi Arabia to continue to "behave responsibly" during the months ahead.
Birol declined to talk specifically about the upcoming meeting of oil producer group OPEC on June 14, but said key producers shared the agency's concern about oil price levels, currently around $107/barrel for Brent crude futures and $91/barrel for US light crude.
Nor would he say whether the IEA was likely to release oil from emergency stockpiles or whether any release might be ordered along the lines of a year ago, when the agency ordered the release of 60 million barrels of oil over two months to compensate for the loss of Libyan exports as a result of the uprising that began in mid-February.
"The oil prices are still very high for the global economy and they are especially high when the recovery is in such a fragile situation," Birol said Monday in an embargoed telephone interview from the IEA's Paris headquarters.
"We know the situation in Europe, in the US -- recently we got some not very encouraging data [on] the US economy. And even China's economy seems to be slowing down," he said. "So, as a result of that, I think the prices are still very high for the global economic recovery."
Birol avoided any discussion of OPEC's June 14 meeting, its first since December when members agreed on an overall output target of 30 million b/d but did not allocate individual country quotas.
Actual production from the group has steadily risen in recent months to levels well in excess of the target. A Platts survey of OPEC and oil industry officials and analysts earlier this month estimated OPEC's April output at 31.7 million b/d.
"I just mentioned to you that we think prices are still very high. But the good news is that this concern is shared by many key producers. Saudi Arabia and others have been making very responsible statements, seeing this very risk, and I really hope that in the next months they are going to continue to behave responsibly. A robust global economy is not only good for the consumers but is also a must for the producers," he said.
G8 leaders from the world's leading economies -- Britain, Canada, France, Germany, Italy, Japan, Russia and the United States -- said May 19 they expected further disruptions to global oil supply once European and US sanctions against Iran are fully in force from July 1 and that they stood "ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully supplied."
The IEA has hitherto shown little appetite for a stock release, executive director Maria van der Hoeven saying as recently as May 3 that there was no current justification for such a move.
"There might be -- might be -- an occasion to do a stock release, but it is not the case to do it at the moment," she said at the time.
The IEA has estimated that the combined impact of the EU and US sanctions on Iran's crude exports could be as much as 1 million b/d, which is nearly half of the country's recent export volumes.
But Birol would not be drawn on the likelihood of an IEA release. Asked whether a stock release was needed now, he said: "...we are following the developments in the market very closely and, as usual, we will act when the market conditions warrant."
