US crude oil release would be driven by politics, economic factors
Venice (Platts)--11Sep2012/821 am EDT/1221 GMT
A release of crude stocks from the US strategic reserve would be
driven by political considerations not just economic ones, Mine Yucel of
the Federal Reserve Bank of Dallas said Tuesday on the sidelines of the
International Association for Energy Economics conference in Venice.
Referring to the impact on crude oil prices of US and EU sanctions
against Iran, she said a strategic release of stocks should be used for
"surprise" supply disruptions rather than to affect the results of
policies that could be foreseen.
According to the International Energy Agency's policy on emergency
releases of oil stocks, such action is designed "to mitigate the
negative impacts of sudden oil supply shortages by making additional oil
supplies available."
It adds: "Although supply shortages may bring about rising prices,
prices are not a trigger for a collective response action...the goal of
the response action is to offset an actual physical shortage, not react
to price movements."
"It's a very political season in the US," Yucel said as the US
presidential election campaigns head into the final straight.
She noted that crude oil prices had risen substantially since June, just
before the latest round of US and EU sanctions came into effect.
Although there are other supply issues, such as a lack of Sudanese
output and maintenance in the North Sea, the loss of Iranian barrels to
the market as a result of sanctions was the biggest supply-side issue,
she said.
International crude oil marker Dated Brent averaged $113.37/barrel over
August, up from an average of $102.59/b in July and $94.84/b in June.
Yucel also questioned whether a release of strategic stocks would have
the desired impact, pointing out that the volume that could be released
would decline, while sanctions would be upheld as long as the EU and US
wanted to keep them.
She added that geopolitical tensions with Iran may also have created
some "precautionary demand" on the part of buyers, helping to push crude
prices higher, adding that the economic impact for all net oil importers
had been negative.
--Ross McCracken,
ross_mcCracken@platts.com
--Edited by Jeremy Lovell,
jeremy_lovell@platts.com
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