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IEA to release reserves if war starts

Claude Mandil, head of the IEA, said consuming countries, as well as members of the Organisation of Petroleum Exporting Countries, would release stocks if military action disrupts oil production in the region, FT.com said.

"What we need to convey to the market is that the shortfall will be offset by both consuming countries and producing countries," he told the Financial Times. Oil prices, up to almost $40 a barrel last month, have been falling sharply in recent days as it emerged that the campaign would start later than expected. At the New York Mercantile Exchange, the front-month April crude oil futures closed at $35.38 a barrel, down 63 cents, after plunging as low as $33.85 a barrel during intraday trading.

Mandil insisted that the IEA would seek to counter the effects of any supply disruption. "If the market is tight, if the stocks are very low and if you have a sharp decrease of 2.5 million barrels per day - which will be the case if Iraq and northern Kuwait were stopped - I would call it a supply disruption." The agency's readiness to release its oil stocks for only the second time in history points to the imminence of war, analysts said.