OPEC urges U.S. to release Strategic Petroleum Reserve
JAKARTA, Indonesia (Reuters) -- OPEC president Purnomo Yusgiantoro said Wednesday he had urged the United States to use its strategic petroleum reserves (SPR) to bring down oil prices.
"We had communication with them (the U.S.). I asked them to use their reserves," Purnomo, also Indonesia's oil minister, told reporters.
He did not say what Washington's response was. The Bush administration has consistently rebuffed calls to use the reserves -- set up by Congress after the 1970s Arab oil embargo as a counterweight to OPEC's market power -- to lower prices, saying that only a severe disruption in supply would warrant a release.
Oil prices have soared around 70 percent to over $50 a barrel this year on unexpectedly strong demand growth that has pushed global production to its limit, leaving the Organisation of the Petroleum Exporting Countries little spare capacity to cool prices.
Purnomo has asked non-OPEC producers to increase production, although they typically pump at full capacity anyway, but the request to Washington is unusual as the cartel usually regards government stockpiles as a threat to its own market control.
"The OPEC president has the mandate to make unilateral approaches on behalf of the whole organization," said an OPEC official.
"He has already called on all producers to raise output, so it's not really a departure from that policy. It is an irony though." Many OPEC members now say that prices are beyond their control and worry that sustained higher costs could eat into future demand growth by spurring use of alternative fuels.
The last major release of the SPR, which currently holds 670 million barrels of crude or around 65 days worth of U.S. imports, was in 2000 and helped bring an end to a rally that saw prices bound from $10 to nearly $38 in just 20 months.
This autumn Washington has loaned 5.4 million barrels of sweet crude oil from the emergency stockpile to five refiners to offset supplies disrupted by Hurricane Ivan in mid-September. More than 400,000 barrels per day (bpd) of Gulf of Mexico production remains out of commission due to the hurricane.
Despite record-high price, the Bush administration has pressed ahead with plans to gradually fill the underground salt caverns that hold the reserve to capacity, with plans to add 22 million barrels through next April.
The International Energy Agency (IEA) said on Tuesday the U.S. did not need to suspend crude oil shipments to its SPR to put more winter heating fuel on the market, because refineries have plenty of oil already.
"As far as I know the shipments (to) the reserves are crude, and the market now does not need additional crude," IEA Executive Director Claude Mandil told reporters.