The head of the International Energy Agency, Fatih Birol, has lashed out at OPEC for failing to bring oil prices down. ″[A] factor I would like to underline that caused these high prices is the position some of the major oil and gas suppliers, and some of the countries did not take, in our view, a helpful position in this context," Birol said, as quoted by CNBC this week.
"In fact, some of the key strains in today's markets may be considered as artificial tightness ... because in oil markets today we see close to 6 million barrels per day of spare production capacity lies with the key producers, OPEC+ countries," Birol added.
On Tuesday, U.S. President Joe Biden announced that the Department of Energy would release 50 million barrels of oil from the Strategic Petroleum Reserve (SPR) in a bid to lower high gasoline prices in a coordinated effort with other major oil-consuming nations.
"[T]his release will be taken in parallel with other major energy consuming nations including China, India, Japan, Republic of Korea and the United Kingdom," the White House said on Tuesday.
The coordinated release was meant to cool oil prices, but instead, prices rallied after the U.S. said it would release crude from strategic reserves.
The IEA acknowledged the release of oil but made a point of noting that the agency had nothing to do with it, with Birol saying the IEA only resorts to reserve releases in emergencies. The official noted the move by the U.S. and its allies was related to the fact that surging oil prices had placed an additional burden on consumers at a time when inflation was also on the rise, and higher oil prices were only aggravating the situation.
So far, OPEC+ has not indicated that either inflation or anything else would interfere with its plans to stick to additions of 400,000 bpd to combined production every month until total output returns to pre-pandemic levels. Instead, there have been hints that the cartel might pause the additions in response to the reserve release.
"A new and unchartered type of price war is brewing in the oil market," said Rystad Energy analyst Louise Dickson, as quoted by CNBC, questioning the timing of the release announcement as forecasts point to the oil market moving closer to balance in the first quarter of next year.
By Irina Slav for Oilprice.com
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