WORLD oil markets are well supplied despite the loss of nearly 1 million barrels a day of crude from Iran following sanctions by the United States and European Union, the head of the International Energy Agency (IEA) told Reuters on Monday.
Brent crude has stayed above $100 a barrel for most of this year due to concerns over supply disruptions after the United States and Europe slapped sanctions on Iran in a bid to force Tehran to abandon its controversial nuclear programme.
“Well supplied. Yes, that’s consistent (with what we’ve been saying),” Maria Van der Hoeven, executive director of the IEA said when asked about global oil supplies.
She was in Canberra to attend a World Energy Outlook presentation to academics, officials and lawmakers.
Supply was sufficient despite the efficacy of the US and European sanctions in choking Iran’s oil exports, she said.
“More than one million barrels a day are not coming onto the market — one million barrels a day of Iranian oil — so (the sanctions) are working,” van der Hoeven added.
Soaring energy costs prompted the United States to talk of releasing strategic petroleum reserves (SPR) as one option to dampen prices earlier this year, a move that was opposed by IEA and some member nations.
A spike in tensions in the Middle East in the past few days, following air strikes by Israel on the Gaza strip and Palestinian rocket attacks, has for now had no impact on the IEA’s outlook for oil market fundamentals, she said.
Investors fear the Israeli-Palestinian conflict could draw in Middle East producers and threaten oil flows from the region, which supplies more than a third of the world’s crude.
January delivery Brent gained 75 cents to $109.70 a barrel by 0610 GMT on Monday, as Middle East tensions added to concerns about supply from the region.
The IEA advises industrialised nations on energy policy and represents 28 oil importing countries.
Separately on Monday, van der Hoeven told a conference in Sydney that lower US natural gas prices due to a boom in shale gas were unlikely to bring down prices in Europe or Asia.
The United States has yet to start exporting liquefied natural gas (LNG).
How much gas it will eventually export is the subject of debate among politicians, some of whom believe exports should be limited to ensure the country’s domestic economy benefits from the shale boom.
Benchmark US gas prices fell as low $2.50 per mmBtu (million British Thermal Units) in June, while gas prices in Europe were running at around $10 per mBtu and in Asia at $16 to $18 per mBtu, van der Hoeven said.
“Let’s be honest, a price of $2.50 mBtu as we’ve seen in the United States doesn’t cover all costs, so it’s impossible to have prices like this in other parts of the world,” van der Hoeven told the annual Australian Institute of Energy national conference.