The global oil market does not face any emergency, the head of the International Energy Agency said on Tuesday, after crude breached $100 per barrel on unrest in Egypt.
"It is not an emergency now," Nobuo Tanaka told Reuters. "If a disruption happens, we should act," he added, referring to both the IEA and the oil producing group OPEC. Even a closure of the Suez canal would only delay, rather than cut, oil supply, Tanaka said.
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Brent crude hit $100 per barrel for the first time since 2008 on fears instability could spread through the Middle East, which together with North Africa pumps over a third of the world's oil.OPEC says it holds about 6 million barrels per day (bpd) of idle production capacity--equal to 7% of world demand--that it could tap to fill any shortage. Most of this capacity is held by Saudi Arabia.
Both Saudi Arabian Oil Minister Ali al-Naimi and OPEC's Secretary-General Abdullah al-Badri signaled on Monday OPEC had no plans to call a meeting before its next planned gathering in June as markets were well supplied.
The IEA and OPEC have repeatedly differed about demand and production levels with OPEC attacking the West for raising fuel taxes and then asking producers for more crude.
The IEA has a mandate to ask its members, the OECD nations, to release oil stocks in the case of an emergency supply disruption. It also comments on the level of supply needed from top producers.
"What we are asking OPEC is to be flexible," said Tanaka. "The next OPEC meeting is in June. The Saudis are certainly producing more than they say. I have heard they are meeting in Riyadh. But I cannot prejudge anything right now," he said.
Badri said a meeting of producers and consumers in Riyadh on February 22 was very unlikely to decide on production quotas as it was not an extraordinary meeting of OPEC.
Tanaka also said the Suez canal and the Sumed pipeline were operating normally and added that even if the Suez canal closed due to unrest in Egypt, it would not create a physical shortage.
His remarks followed the statement by the canal authority which said on Tuesday movement of traffic through the canal was unaffected by ongoing protests.
Tanaka said he had received information that about 1.5 million barrels per day were passing through the canal and the pipeline was shipping 1 million bpd.
"Even if the canal shuts down, (shipments) will go a longer distance, around Africa, the cost will be higher. But it's not really a physical disruption," Tanaka said.
He said that oil stocks in developed countries were at comfortable levels, which would prevent a repeat of the 2008 oil price spike to $147 a barrel.
"Compared to 2008 we are much better prepared in terms of stock level and spare capacity. There is a good chance the market is getting tighter. In that kind of situation OPEC should respond," Tanaka said.