HOUSE_OVERSIGHT_032186.jpg

16

Article 5.
The Financial Time
Global oil supplies are healthier than they
seem
Ian Bremmer

June 24, 2011 -- Many of the world’s oil consuming nations, led by
the US, shocked oil markets this week as the International Energy
Agency agreed to release 60m barrels of oil from strategic reserves
over the coming month. The move was intended to offset price
pressures brought about by Libya’s supply cut and comes in response
to Opec’s recent inability to formally endorse new supply increases.
The IEA action is also an example of growing concern over higher oil
prices in Washington, where the White House is managing political
fallout from high gasoline prices as next year’s presidential elections
loom just over the horizon. Yet, a year from now, we’re likely to
look back on this moment and find that fears for supply have
diminished. There are three reasons. First, the most substantial
fallout from the Arab world’s recent upheaval is behind us. Syria’s
Bashar al-Assad continues to fight for survival and Yemen continues
to flirt with failed-state status, but the Gulf’s major oil-producing
states are quite stable. So are other major producers. Even in Iran,
with its leaders infighting, the green revolution has moved off the
streets for now. While there are plenty of long-term structural
challenges for many major economies – just ask China – for the
moment there are no more Libyas left to explode. IEA action and the
ongoing Saudi supply increases will neutralise what remains of the
oil price’s political risk premium. Second, big additional supply is
coming, and it’s not all priced in. Offshore Brazil and Canadian oil
sands are no longer new stories, but their collective impact has not

HOUSE_OVERSIGHT_032186