U.S and U.K to join forces for a strategic release of oil stocks

United States is all set to make a formal request to the United Kingdom, asking them to cooperate with them on the release of government controlled oil reserves in the meeting scheduled to happen on Wednesday at the Washington. It is expected that Britain would respond in the affirmative.

“We didn’t make any decision, this has to be discussed broadly. We’ve got to look at this issue carefully, it’s something worth looking at. In the Short-term should we look at reserves? Yes, we should” said David Cameron.

A detailed agreement is expected by the next few months after which other details like volume, duration and timings would become clear. Heads of both the nations want to see lower oil prices. Washington might approach other countries including Japan, for the same.

White House spokesperson Jay Carney said that Obama and Cameron discussed oil prices but he did not comment if they discussed about the oil reserves. With Obama’s re-election impending around the corner, U.S cannot achieve effective economic recovery with rising oil prices.

Parsi-based IEA coordinated emergency oil releases to cover substantial supply disruptions in world oil market. Steven Chu, the energy Secretary and Treasury Secretary Timothy Geithner have publicly agreed that the government is considering oil release among other options. Though there are no significant disruptions of oil supply right now, but changes are expected in July when sanctions on Iran’s will cut the output.

South Sudan, Yemen and Syria have also contributed to the rise in oil prices. “There is more supply coming to the market from OPEC countries. There is no price trigger for the stocks release, the trigger is a disruption in physical supplies. At the moment there is no need to use it” said IEA executive director Maria van der Hoeven.

Saudi Arabia is the only country that has any spare capacity. It is ready to bridge the gap but it will do so only to meet the additional demand it anticipates and not as a measure or prevention. The oil market will see a host of changes in the months to come as several economies are facing financial insecurity.

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