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Economic recovery at risk over oil supply says IEA

20 May 2011 08:00
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LONDON. May 20. KAZINFORM The International Energy Agency (IEA) has urged oil producing countries to increase supply to avoid "derailing the economic recovery".

The organisation says high oil prices are threatening the global recovery by reducing spending power and driving up inflation, placing upward pressure on interest rates.

The IEA statement suggests it could release emergency stockpiles if action is not taken.

Opec is due to meet in three weeks, Kazinform refers to BBC News.

"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 IEA said after a governing board meeting on Thursday.

The 12-member Organisation of Petroleum Exporting Countries is due to meet on 8 June to discuss co-ordinating future production.

'Serious concern'

IEA's warning comes just a day after a report said that Iran's president Mahmoud Ahmadinejad would attend the meeting in Vienna.

Iran is Opec's second-largest oil producer and holds about 10% of world oil reserves. It currently holds the presidency of Opec.

"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 IEA statement said.

The energy group said it stood ready to work with producers as well as non-member consumers, but it is "prepared to consider using all tools that are at the disposal of IEA member countries".

US light crude fell $1.66 to settle at $98.44 a barrel on the New York Mercantile Exchange.

While Brent crude slipped 88 cents to $111.42 a barrel on the London based ICE futures.

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Zhanna Nurmaganbetova

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