The Freeland File
Global Market Data
Tales from the Trail
Lucy P. Marcus
David Cay Johnston
The Great Debate
Jack & Suzy Welch
Macro & Markets
Lipper Awards 2012
Personal Finance Video
Our best photos from the last 24 hours. Full Article
Images of February
Exclusive: Brazil to rally BRICS against rich countries
28 Mar 2012
Pope meets Cuba's Fidel Castro, slams U.S. embargo
28 Mar 2012
Authorities charge JetBlue pilot for midair meltdown
Special Report: Gaddafi's secret missionaries
Man hugs doctors after seeing face transplant in mirror
27 Mar 2012
Poll: Americans angry with Obama over gas prices
Cheney recovering after heart transplant: spokeswoman
Black friend defends shooter of Florida teen
Congressman dons a hoodie, gets kicked off House floor
Wed, Mar 28 2012
Elephant runs away from circus
Horror hits the runway in Japan
Fri, Mar 23 2012
Exclusive: West wants Saudi not to neutralize oil release
Oil slips under $123, release talk continues
Consumers plot emergency oil release as Saudi decries high prices
Crude ends lower on inventory rise, reserves talk
Wed, Mar 28 2012
France discussing strategic oil release with UK, U.S.
Wed, Mar 28 2012
UPDATE 10-Oil falls on rise in crude stocks, reserves talk
Wed, Mar 28 2012
Analysis & Opinion
North Sea blowout hardly justifies Total meltdown
Saudi religious police drop lethal car chases in effort to improve image
Saudi Arabia »
Gasoline drips off a nozzle during refueling at a gas station in Altadena, California March 24, 2012. Picture taken March 24, 2012.
Credit: Reuters/Mario Anzuoni
By Richard Mably
Thu Mar 29, 2012 12:27pm EDT
LONDON (Reuters) - Oil consuming nations may seek reassurance from Saudi Arabia that it will not cut oil production and neutralize the impact on oil prices if consumer countries release emergency reserves, diplomats and industry sources said.
The issue may be raised by a U.S. delegation, led by U.S. Secretary of State Hillary Clinton, which is in Riyadh this weekend to discuss Syria with Gulf states. Clinton will see Saudi King Abdullah and Foreign Minister Saud al-Faisal.
"If they're going to release reserves they need an assurance from the Saudis that they won't offset it by cutting supply," said one industry source familiar with thinking in Washington.
"There's no doubt the measure needs the cooperation of Saudi Arabia," said a diplomat.
The United States, with Britain and France, is considering a release from emergency stockpiles to cut fuel costs. Other countries including South Korea and Japan may join the plan.
Riyadh would not want deliberately to undermine an effort to bring down oil prices. But it might reduce supplies in response to a release of oil drawn from reserves if that were to displace Saudi supplies, particularly in the United States where the national Strategic Petroleum Reserve would provide the bulk of any drawdown.
Oil prices have risen sharply since the start of the year, at one point breaking $128 a barrel, largely because of sanctions against oil producer Iran aimed at slowing Tehran's nuclear program.
Diplomats have said the sanctions aim to meet Israeli demands for action against Tehran by hitting Iran's oil earnings and to prevent the alternative - a military strike by Israel.
"The view is that higher oil prices are a price worth paying to prevent or push back a war against Iran and higher oil prices can be alleviated by using emergency stocks," said the industry source.
Saudi Oil Minister Ali al-Naimi has said publicly that Riyadh wants to bring down oil prices.
But he has also said that Saudi can do no more than meet demand for its crude, which it is already doing, and that the previous drawdown of oil reserves last June during the Libyan civil war did not work.
"That's up to them," he said to reporters in Doha last week of a possible consumer country release. "What I can tell you is that they have done it before and it didn't do anything. You saw what happened in the last release? Nothing."
The concern among Western diplomats is that oil from strategic stocks could displace Saudi barrels, particularly to the United States where Saudi imports have risen recently, leaving net supplies globally little changed.
Last year after the International Energy Agency tapped reserves at the end of June to fill the gap left by Libya's civil war, Saudi output at first remained high, and then fell.
Reuters estimates put Saudi production at 9.85-9.9 million barrels per day from July to September before falling to just over 9.4 million bpd in October and November. It has since risen steadily back to about 9.9 million bpd now.
(Editing by William Hardy)
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Be the first to comment on reuters.com.
Add yours using the box above.
Back to top
New York Legal
Support & Contact
Connect with Reuters
Our Flagship financial information platform incorporating Reuters Insider
An ultra-low latency infrastructure for electronic trading and data distribution
A connected approach to governance, risk and compliance
Our next generation legal research platform
Our global tax workstation
About Thomson Reuters
Thomson Reuters is the world's largest international multimedia news agency, providing investing news, world news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
NYSE and AMEX quotes delayed by at least 20 minutes. Nasdaq delayed by at least 15 minutes. For a complete list of exchanges and delays, please click here.