IEA: member reserves could offset Iran

The head of the International Energy Agency said Feb. 14 that its member governments could coordinate a release of strategic oil reserves that would offset a shutdown of Iranian crude output for up to 18 months.

Asked whether the agency’s efforts could wholly mitigate such a production shortfall, Claude Mandil, executive director of the energy watchdog for the Organization for Economic Cooperation and Development, said: “The answer is clearly ‘yes’.”

Worries over the international response to Iran’s nuclear program pushed oil prices back near US$70 a barrel earlier this year, though data showing adequate supplies have calmed the market. Western leaders fear the program is aimed at developing nuclear weapons, though Iran insists it is only intended to generate electricity.

“We have 4 billion barrels in strategic stocks,” Mandil told Dow Jones Newswires. Even taking account lower estimates, he said, the IEA could keep oil supplies flowing for a year and a half.

The Paris-based IEA says its member countries hold 4.1 billion barrels in public and industry stockpiles, of which around 1.4 billion barrels are controlled directly by governments for emergency purposes.

The agency estimates that Iran’s oil production was 3.92 million barrels a day in January, which would translate into 2.1 billion barrels of output over the next 18 months.

Mandil said the IEA’s coordinated response to hurricanes that hit the United States last year demonstrated that the agency could act effectively.

“There won’t be problems with IEA members coming on board,” if Iranian production is shut down, Mandil added.

—The Associated Press