Opec head urges US to use emergency oil reserves

28 Oct, 2004

Opec took the unprecedented step of urging the United States to tap its emergency crude reserves to bring down world oil prices.
Purnomo Yusgiantoro, the president of the Organisation of the Petroleum Exporting Countries, said on Wednesday he had approached Washington to suggest the move to force prices down from $55 a barrel.
"We had communication with them. I asked them to use their reserves," Purnomo, Indonesia's oil minister, told reporters in Jakarta. He did not say what Washington's response was.
In Washington, a White House spokesman said the Bush administration would not use the Strategic Petroleum Reserve (SPR) to influence market prices.
"We've seen the news reports (about the Opec request)," White House spokesman Trent Duffy said. "But the Strategic Petroleum Reserve, we've made it clear, is not to be used to manipulate market prices. It is America's emergency reserve for times of severe market disruptions."
The Bush administration has repeatedly said that the emergency stockpile exists for a severe oil supply disruption, in line with the policy of the International Energy Agency (IEA), the group that co-ordinates policy on oil reserves for 26 industrialised nations. The US reserve was created after the 1973 Arab oil embargo jolted the American economy.
Oil's 70 percent price rise this year has been fired by rapid demand growth, particularly from China, that has eaten up most of the spare capacity held by Opec producers. A shortage of refining capacity worldwide also has helped drive up prices.
Purnomo's request to Washington is unusual as in the past Opec has regarded government stockpiles as a threat to its own market influence.
Before the US-led invasion of Iraq last year, leading producer Saudi Arabia raised output to prevent a supply shock and convinced the United States and other consumer countries that there was no need for a release of their strategic stocks.

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