While Egyptian Unrest Contributes to High Oil Prices, IEA Sees No Immediate Threat to Energy Supplies
31 January 2011
The price of oil (Brent) hit USD 100 per barrel on 31 January 2011 for the first time in over two years.
While prices had been increasing in recent months (up by more than 25% since September 2010), unrest in Egypt has contributed to market uncertainty and created greater price pressure. The experience of 2008 shows conclusively that sustained high oil prices are not in the interest of consumers or producers. The International Energy Agency urges oil producers to be sensitive to market signals and exercise flexibility in ensuring ample and affordable supplies.
Egyptian oil and gas production facilities do not appear to be at risk, as they are far from population centres. While disruption to the Suez passage through the canal and pipeline could have an important impact on oil and gas markets, it does not currently appear likely. If such a disruption did occur, a closure of the canal or pipeline would add considerably to the time needed to ship oil from the Middle East to markets in Europe and further westward, but would not remove the oil from the market. Commercial stocks are ample, including in Europe, where most of these volumes are destined.
Furthermore, IEA member countries together hold emergency oil stocks equivalent to some 145 days of net-imports, including over 60 days of government controlled oil stocks, which is a considerable safety-net for the case of supply disruptions. The IEA will continue to carefully monitor the oil and gas market and developments in the geopolitical situation, and is ready to take action necessary to maintain energy security, which is its core mission.
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