Efforts by some of the world’s biggest oil buyers to coordinate the possible release of emergency reserves and an intervention by Saudi Arabia sent crude prices tumbling on Wednesday (March 28), raising the prospect of relief for Europe’s flagging economies and American motorists facing pump prices of almost $4 a gallon.
Financial Times reported that as France’s energy minister, Eric Besson, confirmed his country was in talks with the U.S., U.K. and Japan to release billions of barrels of oil on to the market, Saudi Arabia’s influential oil minister said Riyadh would do all it could to bring prices down.
Writing in the Financial Times, Ali Naimi said: “The bottom line is that Saudi Arabia would like to see a lower price. It would like to see a fair and reasonable price that will not hurt the global economic recovery.”
Soaring energy prices, driven in part by tensions over Iran’s nuclear programme, are threatening a fragile US recovery and the re-election prospects of US President Barack Obama.
While the discussions are at a preliminary stage and none of the countries involved has decided yet to go ahead with a release, three officials familiar with the talks said action was likely in the next three months.
After meeting with initial opposition from Germany, which maintains the world’s third-largest oil reserve, Washington has turned to Paris, London and Tokyo for support. “France is favorable to the suggestion,” Besson said.
Such action, if agreed by the four countries, could send oil prices sharply lower. Brent crude on Wednesday fell by about $2 a barrel to $123.53. A sharp jump in reported U.S. crude stocks also contributed to the slide.