IEA Governing Board Meets, Assesses World Oil Situation

The Governing Board of the International Energy Agency met today in Paris to discuss the current state of the oil market. It concluded that crude oil available to the market is sufficient to meet current demand, with a small surplus for stock building. But because stocks generally are low, and there are some regional imbalances in product stocks, especially heating oil, there is unusual volatility in the short term; and current high oil prices, if sustained, could jeopardize global economic growth.

Stocks are low for a variety of reasons. In particular, growing energy demand driven by strong economic growth outstripped the constrained oil supply throughout 1999 and into the year 2000.

More crude oil is coming to the market as a result of recent decisions of producing countries to increase oil production, and the declared readiness of Saudi Arabia to increase production to satisfy market needs is encouraging.

The IEA welcomed the positive effect on the market of the recent decision by the United States government to release 30 million barrels of crude from its Strategic Petroleum Reserves to cope with a regional product supply imbalance.