IEA makes rare formal plea to oil producers

Friday, 20 May 2011 00:46 - - {{hitsCtrl.values.hits}}

(Reuters) - The International Energy Agency (IEA) on Thursday urged oil producers to take action to protect the economy and welcomed commitments to raise output, members said in a statement at a regular two-day governing board meeting.

It was an unusual move for the Paris-based energy advising arm of the OECD, which has a policy not to comment on oil producers’ policies.

“The governing board urges action from producers that will help avoid the negative global economic consequences which a further sharp market tightening could cause, and welcomes commitments to increase supply,” the members said in a statement.

The Organization of the Petroleum Exporting Countries, which is meeting in Vienna on June 8, has held its official output targets steady even as prices surged above $120 a barrel, saying supply was sufficient. In its latest monthly report on May 11, OPEC said the sharp price drop on May 5 and 6 was no great surprise.

The IEA said oil prices remained at high levels despite a near 10-percent correction since the start of the month. This was driven by fundamentals, geopolitical uncertainty and future expectations, the statement said.

“The IEA governing board expressed serious concern that there are growing signs that the rise in oil prices since September is affecting the economic recovery,” the statement said.

As global demand for oil increases seasonally from May to August, IEA members said there was a clear and urgent need for additional supplies to be made to refiners.

The IEA added it stood ready to work with producers as well as consumer countries which are not members.

“In this constructive spirit, we are prepared to consider using all tools that are at the disposal of IEA member countries,” the members added in the statement.