* Serious concern oil prices hurting economy
* Prepared to consider "all tools at disposal"
* US officials play down SPR release, but calls continue
* OPEC to meet in Vienna on June 8, seen unlikely to act
* IEA statement: iea.org/index_info.asp?id=1952
(Updates with White House comment, paragraph 13)
By Muriel Boselli and Richard Cowan
PARIS/WASHINGTON, May 19 The West's energy
watchdog urged oil producers to protect the global economy by
boosting supply to cut fuel costs, and appeared to suggest its
members could release emergency stockpiles if OPEC failed to
"The governing board urges action from producers that will
help avoid the negative global economic consequences which a
further sharp market tightening could cause, and welcomes
commitments to increase supply," the International Energy
Agency, or IEA, said after a governing board meeting on
The statement comes just weeks ahead of OPEC's June 8
meeting and a day after price hawk Iran said its hardline
President Mahmoud Ahmadinejad would represent Tehran at OPEC as
Iran's caretaker oil minister.
The 12-member Organization of the Petroleum Exporting
Countries says world supplies are adequate.
"The IEA governing board expressed serious concern that
there are growing signs that the rise in oil prices since
September is affecting the economic recovery," the statement
The IEA said it stood ready to work with producers but
added: "In this constructive spirit, we are prepared to
consider using all tools that are at the disposal of IEA member
The 28-member IEA oversees some 1.5 billion barrels of
government-held oil inventories that can be released in the
event of an emergency outage.
The loss of about 1.2 million bpd of Libyan exports in
February is well short of the volumes that would normally
trigger an IEA emergency release, but there has been
speculation that the United States could tap government
stockpiles if things get worse.
The Paris-based IEA could not give guidance on whether or
not its statement was referring to a possible emergency
But oil prices CLc1 fell more than $1 a barrel on
Thursday as analysts said consumers seemed to be getting
frustrated with what they see of lack of action by OPEC.
"This looks like a coded message to OPEC, a shot across the
bows before the June meeting," said Bill Farren-Price of
Petroleum Policy Intelligency.
President Barack Obama said in March a significant supply
disruption or shift in the market could push him to use the
reserves and that the administration had a plan that could be
set in motion in a few days, not weeks, if needed.
The White House said on Thursday tapping the 730 million
barrel Strategic Petroleum Reserve remained a possibility.
"Tapping the SPR continues to be one of the options on the
table," said spokesman Clark Stevens said.
But Interior Secretary Ken Salazar seemed to play down the
likelihood of tapping the reserve now.
"Our position ... on the SPR is that it won't have
significant impact on the price of gasoline," Salazar told
reporters. He said historically the reserve has not been
released to tackle high gasoline prices, but rather supply
Jeff Bingaman, the chair of the Senate Energy Committee,
also said through a spokesman there was no need for a release
in the short-term because U.S. supplies are ample. Oil
stockpiles in the United States are hovering at a two-year
But calls by some U.S. lawmakers to use the reserve,
including from Obama's Democratic party, continue as petroleum
prices remain stubbornly high.
The IEA normally does not comment on oil producers'
"It is quite rare that the IEA goes out directly to give
suggestions to OPEC," said Christin Tuxen at Danske Markets.
"It suggests the IEA is worried that we haven't seen OPEC
increasing supply... Libyan production has basically come to a
halt and Saudi Arabia has been very slow to increase supply,"
As global demand for oil increases seasonally from May to
August, IEA members said there was a clear and urgent need for
additional supplies to be made to refiners on a "more
Oil prices have rallied sharply since the beginning of the
year on unrest in North Africa and the Middle East, reaching
near $130 per barrel. They corrected sharply in early May and
Brent crude LCOc1 is now valued at $112 a barrel with signs
that high prices are rationing demand in the West.
However many analysts, including from big banks like
Goldman Sachs, Barclays Capital and Deutsche Bank, said they
expected prices to return to or exceed recent highs at the end
of 2011 due to tightening supplies. [ID:nLDE74513V]
OPEC has held its official output targets steady even as
prices surged, saying supply was sufficient. Its biggest
producer Saudi Arabia lifted output earlier in the year but has
since cut back again, citing poor demand.
A delegate from one of OPEC's Gulf countries earlier this
month raised the possibility of increasing OPEC's output
targets to help lower prices as well as to bring official
allocations back in to line with actual supply.
Some in OPEC, such as Iran and Venezuela, are likely to
disagree. The attendance of Ahmadinejad at the June meeting has
strengthened analysts' view the group is unlikely to act.
(Reporting by Muriel Boselli and Zaida Espana, and Richard
Cowan, Timothy Gardner, Jeff Mason and Tom Doggett in
Washington, writing by Richard Mably; editing by Anthony Barker
and Jonathan Leff)