Energy Agency Sees No Oil Shortage on Horizon

The West’s energy watchdog said Friday that it sees no oil shortage developing in the next two months due to the U.N. embargo of Iraq and Iraqi-occupied Kuwait.

“We are clear at least up to November,” said Ulrich Engelmann, president of the International Energy Agency. “Then we are running into the winter season, which means a tight market.”

In a statement issued after a meeting of the Paris-based agency’s governing board, the IEA said it saw no need for its 21 member governments, including the United States, to take extra measures to ensure balance in the oil market.

The agency said the loss of some 4 million barrels a day of Iraqi and Kuwaiti crude would be made up by drawdowns in stockpiled oil, higher production and slightly lower demand caused by higher prices.

The 13-nation Organization of Petroleum Exporting Countries decided in Vienna on Wednesday to boost output to bridge most of the gap. Iraq, which invaded Kuwait Aug. 2, and its closest OPEC ally, Libya, did not attend the ministerial meeting.

The IEA said Friday that some non-OPEC oil producers also were increasing output.

Engelmann said IEA executive director Helga Steeg had sent a message to OPEC thanking it for its response to the loss of oil from Iraq and Kuwait.

The IEA, grouping some of the world’s biggest oil consumers, said its members would take additional joint measures if necessary, including coordinated use of government-controlled stocks or moves to contain demand.

At OPEC’s Vienna meeting, Iran argued unsuccessfully for increased production to be linked to willingness in the West to draw on such strategic reserves.

The West’s stocks are at historically high levels, a situation that has irritated some OPEC members who feared a slump in prices if the release of more oil was followed by a quick solution to the Persian Gulf crisis.

“The situation is much more manageable than would have been the case if there hadn’t been the increase in OPEC production,” said John Easton, a U.S. Energy Department official.

The watchdog body said it reserves the option of calling for emergency oil-sharing measures or the use of strategic petroleum stocks if the situation worsens.