Yet Another Article: Saudis Can't Make Up Shortfall

Link here.

International Energy Agency Executive Director Nobuo Tanaka, making good on earlier threats, said the 28 IEA member countries have agreed to release 60 million bbl of oil in the coming month in response to the ongoing disruption of oil supplies from Libya.

“Today, for the third time in the history of the International Energy Agency, our member countries have decided to release stocks,” Tanaka said, adding, “I expect this action will contribute to well-supplied markets and to ensuring a soft landing for the world economy.”

IEA member countries have agreed to make 2 million b/d of oil available from their emergency stocks over an initial period of 30 days. IEA said it had been in “close consultation with major producing countries, as well as with key non-IEA importing countries” ahead of making this decision.

IEA expected that North America would release half of the total, with European countries releasing some 30%, and Asian countries, the remainder. IEA said it will produce a tally “once it has a clear indication of the types of oil that each country will make available.”

I thought "everyone" said the Saudis could make up any shortfall.

Here's the LA Times on the story:

The price of oil tumbled Thursday after the U.S. and other industrialized countries said they would release 60 million barrels of crude from their stockpiles in a bid to revive the flagging economic recovery by driving down painfully high energy prices.

"This is about addressing supply disruptions and their potential impact on global economic growth," a senior administration official told reporters on a conference call.

High oil prices, along with business disruptions created by the Japanese earthquake and tsunami, have battered the fragile recovery. Thursday's surprise announcement sent the price of crude sinking $4.31 to $91.10 a barrel in New York trading.

Although cheaper oil is considered a plus for the economy, the stock market didn't react well to the news, partly reflecting a disappointing report on jobless claims. The Dow Jones industrials dropped more than 200 points before rebounding. The index was down more than 110 points about 15 minutes before the closing bell.

The stockpiled oil, half of it to come from the U.S. government's Strategic Petroleum Reserve, is scheduled to be sold on the energy markets over the next 30 days, the Obama administration said Thursday.

On the other hand, Goldman Sachs thinks Libyan rebel forces could export 355,000 bbls/day.

Libya’s oil exports could rise by as much as 355,000 b/d from areas held by forces opposed to the rule of the country’s leader Moammar Gadhafi, according to an analyst report.

“The opposition forces could resume about 200,000 b/d of crude exports as some fields and their related export terminals are largely intact,” said the report by Goldman Sachs Group Inc. “A further 155,000 b/d could potentially be exported at a later stage from a second loading port under their control.”

The report said Libya’s oil exports could climb as high as 585,000 b/d if Gadhafi is removed from power and production resumes from western fields held by his government.

Something tells me the international community to release oil from the SPR is more than about the lost Libyan oil. 

One almost gets the feeling that bigger surprises are in store.

One non-surprise: I think some administration folks are thinking that the Libyan non-war could last a long, long time; that China's growth will exceed expectations and demand for oil; and, that Japan, will need more fossil fuels to replace the nuclear energy they've lost.