The head of the International Energy Agency criticizes the artificial tension in the energy market

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The picture shows the oil pump jack in the Kern River oil field in Bakersfield, California.

Jonathan Alcorn | Reuters

The heads of the world’s major energy agencies said that some countries have failed to take a stand that helps to calm the soaring oil and natural gas prices, criticizing the energy market for “artificial tension.”

“[A] What I want to emphasize is that the factors leading to these high prices are the positions of some major oil and gas suppliers. We believe that some countries have not taken a useful position in this regard.” Executive Director Fatih Birol (Fatih Birol) ) The International Energy Agency said in a news webinar on Wednesday.

“In fact, some of the key pressures in today’s market may be considered artificial tension…Because in today’s oil market, we see that nearly 6 million barrels of idle capacity per day are controlled by major producers, OPEC+ countries.”

His remarks come as energy analysts are evaluating the effectiveness of the US-led commitment to release oil from strategic reserves to curb fuel price surges.

Among such initiatives, President Joe Biden announced the coordinated release of oil by the United States, India, China, Japan, South Korea, and the United Kingdom.

The United States will release 50 million barrels from its strategic oil reserves. Of these, 32 million barrels will be traded in the next few months, and 18 million barrels will be an acceleration of previously authorized sales.

In recent months, OPEC and non-OPEC oil-producing countries — an influential organization commonly referred to as OPEC+ — have repeatedly rejected US calls for increased supply and lower prices.

Birol said that the IEA recognizes that the United States has made parallel statements with other countries and that the soaring oil prices have put a burden on consumers around the world.

He added: “In a period when the economic recovery is still unbalanced and still faces many risks, this also puts additional pressure on inflation.”

Birol stated that he wanted to make it clear that this was not a collective response from the IEA. He said that the Paris-based energy agency will only take action to mine energy stocks in the event of a major supply disruption.

“A new and unknown price war”

Due to short supply, oil prices have risen by more than 50% so far this year, setting a new multi-year high. The momentum behind the price increase even induces some forecasters to predict that oil prices will return to $100 per barrel, although not everyone agrees with this view.

The international benchmark Brent crude oil futures traded in London on Monday afternoon at US$82.27 per barrel, down about 0.1%, while the price of West Texas Intermediate crude oil futures was US$78.47, almost unchanged during the session.

“The oil market is brewing a new and unknown price war,” Resta Energy senior oil market analyst Louis Dixon said in a research report on Wednesday.

“The world’s largest oil consumer has pledged to release unprecedented and relatively large strategic reserves to the market to quell high oil prices during the recovery of the pandemic.”

Rystad Energy said that if the United States, China, India, Japan, South Korea and the United Kingdom begin to release oil as early as mid-December, it may be enough to exceed crude oil demand next month.

Dixon said: “If the fundamental probation in the first quarter of 22 is imminent, this raises the question of how strategic the timing of Biden, Xi and others is.”

She added: “Since the oil market was the most tense in September and the supply needs to be eased, the release may be too much and too late.”

— CNBC’s Pippa Stevens contributed to this report.

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