Nations Asked to Prepare Oil Reserves : Energy: IEA stops short of asking 21 countries to release their stocks. Economists call it a short-term solution.

The International Energy Agency today asked its 21 member nations to prepare to use their strategic oil reserves if necessary to boost the world petroleum supply following the loss of Iraqi and Kuwaiti crude.

“The actual situation remains manageable but not comfortable,” the governing board of the agency said in a statement.

The IEA stopped short of asking members to release their stocks on the world market in order to curb the rise in oil prices.

The committee “recommends that each member state take all necessary measures to be ready to allow the competent authorities to draw immediately and effectively on their stocks and/or to put in operation measures aiming to increase their capacity for production and to restrain demand in case of a new significant decline in supplies,” the statement said.

The IEA sources also said the agency is opposed to using oil stocks to calm global markets. Agency economists have indicated such sale of reserves will only have limited effect on prices because the market is more sensitive to the threat of war than it is toward short-term fluctuations in demand and supply.

President Bush ordered Wednesday the sale of 5 million barrels of oil from the U.S. Strategic Petroleum Reserve, the first time the United States has tapped its 590-million-barrel stockpile.

Bush Administration officials said the move was a test to see if the system could work in an emergency. But on the day the move was announced, the President criticized “unwarranted speculation” that drove up the price of oil on world markets.

IEA governments and the oil companies working with them have an estimated 1.7 billion barrels in their reserves.

Echoing the conclusion of the board’s Aug. 31 meeting, the communique said recent oil price rises were driven by “extreme political uncertainty,” not by actual shortages.

Increased production by Saudi Arabia, the United Arab Emirates and Venezuela has resulted in the Organization of Petroleum Exporting Countries cartel’s producing 22 million barrels daily in September, IEA sources said. That virtually equals the ceiling that was set by OPEC last July, before Iraq invaded Kuwait.