PARIS, March 28 — France is in talks with the United States and Britain on a possible release of strategic oil stocks to push fuel prices lower, French ministers said today, four weeks before the country’s presidential election.
Earlier in March, British sources said London was prepared to cooperate with Washington on a release of strategic oil stocks that was expected within months, in a bid to prevent fuel prices choking economic growth in what is also a US election year.
France’s Energy Minister Eric Besson told journalists after the weekly ministers’ meeting that the United States had asked France to join it in a possible emergency inventory release.
Such a release could happen “in a matter of weeks”, Le Monde daily said today, citing presidential sources.
Crude oil prices, which have risen almost 16 per cent since the start of the year, fell more than a dollar on the news.
“It is the United States which has asked and France has welcomed favourably this hypothesis,” Besson said. He also said that the countries were awaiting conclusions from the International Energy Agency (IEA), which coordinates emergency stock releases in case of severe oil supply disruption.
The French budget minister and government spokeswoman, Valerie Pecresse, also told journalists France had joined the United States and the UK in IEA consultations to receive authorisation to draw from strategic stocks.
A problem for politicians
Rising oil prices have become a major headache for politicians around the world including US President Barack Obama aiming for re-election in November and facing public anger over soaring US gasoline prices.
Fuel prices in France have hit record levels, prompting an intense debate between presidential candidates ahead of the national election.
In neighbouring Germany, the government in Berlin said today it was unaware of any official request from the United States to release emergency oil stockpiles and did not believe the current situation justified such action under German law.
The German law on oil provisions says emergency reserves can only be released in the case of “physical disruption to supplies. In our view there is no physical shortage at the moment,” a government spokeswoman told reporters.
Oil reserve releases are normally coordinated by the IEA, representing 28 industrialised countries on energy policy.
But the head of the IEA Maria van der Hoeven has said on several occasions that a coordinated IEA release is not warranted because there is no significant supply disruption on world oil markets. Germany and Italy say they are opposed.
Van der Hoeven said earlier this month that countries could choose unilaterally to release stocks in consultation with the agency. The IEA declined further comment today.
The Paris-based IEA has authorised only three coordinated releases since it was founded in 1974, with the last one in June 2011 following the loss Libyan production during its civil war.
Aggregate global oil supply outages are running at more than a million barrels a day, a Reuters survey has found, helping provide justification should the US, Britain and France decide to release strategic reserves. Further losses of supply are expected as sanctions on Iran hit its oil exports.
“The use of strategic reserves can be justified because it is related to geopolitical tension,” a source at the presidential office was quoted as saying in the newspaper. — Reuters