As protests move from the east of Libya towards its capital Tripoli, triggering the decision by BP to suspend some of its operations in the country, markets are nervously watching the oil price.
According to David Fyfe, the International Energy Agency’s head of oil industry and markets division, around 50,000 barrels per day of crude production have been shut in because of the anti-Gaddafi protests and the regime’s response to them.
So concerned is the IEA that Fyfe felt the need to remind delegates at International Petroleum week, which started in London today, that his organisation was sitting on 1.6bn barrels of publicly-held crude stocks, which it could tap if supplies were seriously interrupted.
The IEA has only twice used such a mechanism before – in 1991 and 2005, in the wake of hurricanes in the Gulf. Fyfe was keen to play down the chances of using it again, saying:
Our view is this is not something that should be used in terms of price management… It is an element of last resort but it is worth pointing out that it exists and has been used as a tool before.
The 1.6bn barrel figure would equate to 4m bpd over 12 months, which should be able to make up any shortfall from production lost in the region – although it will be considerably more stretched if Saudi production is similarly affected. But Fyfe also added that the figure related only to publicly-held stocks. There is more oil currently owned by private companies which the IEA can also tap, he said.
But the fact that he felt the need to mention such a tool at all should give an indication of how seriously major oil players are taking the spreading trouble in North Africa and the Middle East.