March 29 (Bloomberg) -- France said governments are moving closer to an agreement on a release of oil from emergency stockpiles to stem gains in crude that have driven prices to the highest levels in three years.
The prospects of an accord between the U.S. and Europe on tapping strategic reserves are “good” and consumers can “reasonably expect” a release, French Prime Minister Francois Fillon told France Inter Radio today. U.S. President Barack Obama and U.K. Prime Minister David Cameron discussed the move earlier this month. France will only use its oil reserve in coordination with other countries, Finance Minister Francois Baroin said on Europe 1 radio.
“There is definitely increasing talk about releasing stocks, and now they are talking so much, it’s going to be hard not to do something,” Olivier Jakob, managing director at Petromatrix GmbH, a Zug, Switzerland-based researcher, said by phone. “Oil prices are rising, which is a threat to the economic recovery, so pressure is growing on governments. The Saudis aren’t acting, so the only thing left is to release stocks.”
Brent crude, a benchmark grade for about half the world’s oil, gained 15 percent this year on concern demand will outstrip supply amid tightening sanctions on Iran and output disruptions in Sudan, Yemen, Syria and the North Sea. The gains have helped spur claims in the U.S. that President Barack Obama needs to do more to curb rising fuel costs in an election year. The “oil burden,” the proportion of global gross domestic product accounted for by spending on fuel, is higher than during the 2008 crash, the International Energy Agency says.
Brent slipped for a third day today, dropping 73 cents, or 0.6 percent, to $123.43 a barrel as of 3:18 p.m. in London. West Texas Intermediate retreated $1.19, or 1.1 percent, to $104.22 a barrel in New York.
Iran, the second-largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia, may lose crude exports of as much as 1 million barrels a day because of a ban on its oil, according to the IEA. The Paris-based adviser to 28 consuming nations coordinated the release of 60 million barrels of crude and oil products in June after Libyan output was disrupted by an armed uprising against Muammar Qaddafi.