Brussels, 28/06/2011 (Agence Europe) - On Monday 27 June, it was a dialogue of the deaf that took place between the EU and OPEC in Vienna where the European ministerial delegations headed by Commissioner Oettinger and the president of the Energy Council, Tamas Fellegi of Hungary, spoke of their disappointment regarding the cartel's decision to no longer market oil, while the International Energy Agency (IEA) announced last week that emergency reserves would be freed up. OPEC, which is prey to internal strife, defends its position by forecasting moderate economic growth after recovery, leading to lower oil demand in coming months.
Iran, which will be holding the OPEC rotating presidency until end 2011, maintained in Vienna on Monday at the annual meeting of the EU-OPEC dialogue, that it is not necessary to increase stocks of crude on the market. It criticised the initiative taken along these lines last week by the International Energy Agency (IEA) to free up strategic reserves (60 million barrels during one month, i.e. 2 million per day) given the cartel's refusal to step up its production to offset defection of Libyan production. Iranian Oil Minister Mohammed Aliabadi said market conditions were normal and that it was not necessary to increase supply. He underlined the need for prices to be determined by the market, raising doubts about the large consumer countries' respect for the free trade principles that they uphold. Iran, Algeria, Angola, Ecuador, Libya and Venezuela blocked, on 8 June, a proposal to step up production advocated by Saudi Arabia. The decision taken by the western countries to tap into emergency reserves to offset the Libyan shortage is not seen with a favourable eye by most of the countries that make up the oil organisation. Tehran takes the view that this is clearly an operation that aims to bring down oil prices artificially.
The European delegation, for its part, sought to ease the tension. “Releasing stocks of crude as recommended by the IEA must be an exceptional measure and limited in time”, said Tamas Fellegi, who presides over the Energy Council. “It is in the interest of both parties to seek efficient responses to imbalances to ensure stability in demand and supply”, commented Energy Commissioner Günther Oettinger. “Whatever the different parties do, they have to be very careful”, added the Hungarian minister, stressing the need for transparency and cooperation. After the meeting, Fellegi and Oettinger welcomed what they described as “constructive” debates, despite the differences over price and price volatility.
Validated by the European party, the joint conclusions of Monday's meeting indicate that the OPEC expects “the momentum” to be “moderate this year, due to such issues as debt burdens, particularly in some parts of the EU region, inflationary pressures in major economies and prolonged unemployment, thus creating downward risks with regard to the level of oil demand in the near future. On the supply side, the physical market continues to be supported by above-average trend growth in major producing regions, as well as sufficient stock levels. Additionally, OPEC continues to offer an adequate level of spare capacity for the benefit of all”. (E.H./transl.jl)