We are filling a gap in oil supply, IEA head insists

The head of the International Energy Agency, the group that orchestrated the release of 60 million barrels of oil from major consuming nations last week, defended the move.

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The head of the International Energy Agency (IEA) yesterday defended the group's decision last week to release 60 million barrels of oil from strategic reserves.

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The announcement of the extra supplies, due to begin arriving on the market on Friday, sent the price of oil plummeting to January levels and drew criticism from some members of Opec.

Yesterday Nobuo Tanaka, the executive director of the IEA, insisted the influx had been intended to make up for the shortfall from Libya, where civil war has erased most of its 1.6 million barrel capacity, until oil producers stepped in.

"We are simply saying we will just fill the gap before Opec or Saudi is going to produce supplies for the market," Mr Tanaka said. "We are just filling the gap - we can't continue forever."

The announcement of July's 2 million barrel per day (bpd) influx, which is to be drawn from US reserves and the IEA's 1.6 billion barrel emergency stockpile, came two weeks after an Opec meeting in which member states could not reach a consensus to raise output targets.

The IEA had been arguing that sustained high oil prices could reverse the global economic recovery.

Saudi Arabia, which holds most of Opec's 4 million bpd spare capacity and had been advocating a ceiling increase before the meeting, hinted afterwards that it would pump an extra 1 million barrels.

Abdullah El Badri, the secretary general of Opec, on Monday called for an end to the IEA release.

* with Reuters