PARIS, SEPT. 28 -- The International Energy Agency today urged its 21 member countries to make "all necessary decisions" to prepare for an oil supply crisis but said there was no reason at this time to dip into strategic reserves to compensate for oil losses from the international embargo against Iraq and Kuwait.
Nearly two months after Iraq invaded Kuwait, the agency's governing board concluded that there were no shortages affecting member countries, which represent nearly all of the Western industrialized world, and that oil markets were receiving sufficient supplies despite a leap in oil prices to almost $40 a barrel.
The IEA, founded in 1973 to protect Western economies from oil price shocks, declared that the surge in world oil prices stemmed from "extreme political uncertainty" and not from any logical connection between supply and demand. Nonetheless, IEA directors urged countries to be vigilant about a possible sudden shortfall if hostilities erupt in the Persian Gulf. In that case, they said, an emergency session would be convened to make pooling arrangements.
Despite President Bush's decision to sell 5 million barrels from the U.S. strategic petroleum reserve, the IEA board did not ask Japan and West Germany, which along with the United States possess the largest oil stocks in the industrialized world, to tap their reserves.
Governments in Japan and West Germany have been reluctant to follow the U.S. example because they say they only want to use oil reserves in an extreme emergency.
Administration officials said the U.S. sale was primarily a test to see how quickly oil from the nation's strategic reserve of 590 million barrels can be moved on the market. Japan maintains stocks of 215 million barrels, and West Germany holds 197 million barrels in reserve.
John J. Easton Jr., assistant U.S. energy secretary for international affairs, said there was concern that getting oil stocks from strategic reserves to consumers would take longer in the United States than in other countries. In the United States, reserve oil is stored in underground salt caverns in Louisiana and Texas. "Our emergency systems may be a few days slower, but at least we will know that it works," he said.
Some oil analysts argue that with oil prices reaching historic levels, an immediate sale of reserves by the United States could bring windfall profits for the government, help deflate prices and curtail inflation. Holding onto the oil, they say, signals that governments expect prices to go higher, which in turn feeds speculative fever.
The market's alarmed mood, at a time when supplies are plentiful, has led to charges that private oil companies are building up stocks to maximize profits. Antonio Cardosa e Cunha, the energy commissioner of the 12-nation European Community, said this week that the latest rise in oil prices was "totally unjustified and indefensible" and that it was clear that oil companies were gouging customers.
The IEA board advised oil companies to continue drawing down commercial stocks, which are considered plentiful, and to avoid rash purchases that could add to panic in world markets.
The IEA strategy appears aimed at holding supplies in abeyance because of the risk of warfare in the gulf. At the same time, the board has urged conservation measures and called on member countries to show "flexibility" in enforcing environmental restrictions.
The agency estimated total crude output from the 13 members of the Organization of Petroleum Exporting Countries at 22 million barrels a day in September, up from 19.7 million in July. The increase stems from expanded production by Saudi Arabia, the United Arab Emirates and Venezuela, which have tried to offset losses of about 4.8 million barrels a day from Iraq and Kuwait under the U.N. embargo.
The board, in a communique summarizing its findings, described the supply situation as "manageable though not comfortable." Ulrich Engelmann, the West German representative on the IEA board who chaired the session, said, "We do not believe that the situation demands a recourse now to government oil reserves."