The French prime minister has said that there’s a “good chance” the United States and Europe will agree to release oil reserves into the market to drive down crude prices, but discussions are still ongoing.
France is the latest nation to contemplate tapping into its reserves, with hopes that a joint release with the US and the UK could curb rising prices. Crude oil prices, which have risen almost 16 per cent since the start of the year, fell more than a dollar on the news. The move, according to different sources, could come in a matter of weeks – but the countries are awaiting conclusions from the Paris-based International Energy Agency (IEA), which coordinates emergency stock releases in case of severe supply disruptions.
Last summer, when the war in Libya tightened supplies, especially for Europe, countries belonging to the IEA released 60 million barrels of crude into the market to cool prices. Now, with new sanctions banning Iranian oil exports, the prices are soaring once again, fueling international panic.
Fears that a military attack on Iran’s nuclear facilities would disrupt crude supplies have helped drive oil up from 75 US dollars in October, and these unstable energy prices threaten to derail an already fragile global economic recovery.
But the head of the IEA, Maria van der Hoeven, has frequently said that a coordinated IEA release is not warranted because there is no significant supply disruption on world oil markets. So what is driving politicians to call for such a drastic measure?
Apparently, it’s the people fueling this political decision. Or, more accurately, the choices those people will make in the upcoming presidential elections in both the US and France.
Although President Nicolas Sarkozy has enjoyed a small bounce in the polls after recent home-grown terrorist attacks, he’s still lagging behind his main rival, Francois Holland. In the face of slow economic growth, consumer discontent over rising gasoline prices is rising too – especially with prices hitting a record high. In the capital, Paris, some pumps are selling fuel for over 2 euro per liter, or 10 US dollars a gallon.
On the other side of the Atlantic, President Barack Obama is facing serious voter discontent over rising gas prices, and his opponents have been more than eager to take advantage of it. GOP presidential hopeful Newt Gingrich has been promising voters he’ll drive gas prices down to $2.50 a gallon if elected. Rick Santorum went even further, calling Obama’s environmental concerns “phony theology.”
Political analyst Peter Eyre told RT that the move’s “political overtones are evident, with the upcoming elections in the next twelve months on either side.” He explained that making the decision to release strategic oil reserves is crucial to bringing down prices, and if it isn’t done, “within a short period of time it’s going to run up against them in the election.”
Jamal Abdi from the National Iranian American Council says he is skeptical about the ability of Western countries to contain the rise of oil prices in the long run.
“The US and the EU have passed these unprecedented sanctions without a real strategy or understanding of what comes next. And we’re finding that the sanctions that we’ve put in place to restrict Iran from profiting of oil sales are actually backfiring on us,” he told RT.