Report: IEA to release oil reserves

The International Energy Agency (IEA) likely will call on countries to release oil reserves to combat rising prices and maintain the integrity of Iranian sanctions, according to trade journal Petroleum Economist.

With oil prices spiking 30 percent since June, unnamed IEA sources said the agency is poised to dip into Western nations’ strategic reserves as early as September. 

The IEA originally opposed a unilateral U.S. plan to tap its Strategic Petroleum Reserve (SPR). But the agency reportedly gave in after the Obama administration insisted on using the SPR. It has now asked the White House to wait for other countries to join the effort, according to the report.

The IEA believes releasing reserves will preserve confidence in international sanctions imposed against Iran for its nuclear activity. Those sanctions have crippled Iran’s ability to export oil while at the same time constraining international supply and forcing prices upward.

But the timing has political overtones in the United States. High gasoline prices could hurt Obama, and GOP challenger Mitt Romney has argued the president’s energy policies restrict fossil fuel drilling that would bring gasoline costs down.

Dipping into the SPR, however, is not unprecedented for Obama. The administration released 30 million barrels of oil from the SPR in June 2011, which the IEA matched. Republicans at the time criticized the decision, saying the president should focus on developing long-term energy strategies rather than tapping petroleum from the SPR.

Republicans likely will renew those calls if the administration follows through with a similar action this fall, especially given the support the party base lent Romney’s energy plan. Romney said his plan, announced Thursday, would help expand fossil fuel exploration on public lands by handing oversight to the states.