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Energy agency plans for Middle East disruption
Jeremy Cresswell Northern Business Editor (firstname.lastname@example.org)
THE International Energy Agency is planning for the possibility of a disruption to Middle East oil supplies but has no immediate intention of releasing strategic stocks, the organisation said yesterday.
IEAís standing emergency response team is drawing up scenarios in case of an outage caused by allied military action against Afghanistan, a spokeswoman for the Paris-based organisation said.
The Westís energy watchdog, representing 31 industrialised nations, requires its members to hold stocks worth at least 90 days of imports and can order a release in the event of supply disruptions.
Houston and Aberdeen energy industry bank, Simmons & Company International, said yesterday that, when indigenous oil production is taken into account, the US is better than 90 days while Europe, which traditionally tends to hold smaller reserves, is around 85 days.
"It is quite normal that the agency re-examine our responses given potential events. We did it for Y2K and nothing happened," the IEA spokeswoman said.
She was responding to a claim that the IEA was preparing to intervene immediately and release up to two million barrels a day, if oil markets became turbulent following any US action in the Middle East.
While Western oil stockpiles did erode during the late 1990s due to a mix of "just-in-time" refinery stocking experiments coupled with the world oil price slump, they have been rebuilding over the past two years.
The US stockpile currently stands around 30 days in industry hands, a further 30 or so in government stockpiles, plus 6 million barrels per day of indigenous oil production. This takes it past 90 days according to Simmons.
Europe also carries a mix of industry and government stocks, plus North Sea production. Because the UK is a net exporter of oil, strategic stockpiles are nominal.
"The US is well covered," said Aberdeen-based Simmons vice-president Roger Read. "History tells us that Europe is close behind ... about 85 days. There are about 63 days of cover in stocks, plus production."
Read said that, so long as Afghanistan was the target, it was unlikely stockpiles would be touched.
But should the focus of attention switch to one of the Middle Eastís oil producers - perhaps Iraq - that was a different matter.
Oil traders have mostly discounted the possibility of any serious disruption to Middle East supplies in the wake of the 11 September suicide attacks in the US.
-- Martin Thompson (email@example.com), October 03, 2001