No time for OPEC to close taps, IEA says

Aug. 10, 2011 at 7:41 AM

VIENNA, Aug. 10 (UPI) -- Oil supplies may eclipse demand in 2012 if world economies fail to emerge from recession though OPEC shouldn't panic, the International Energy Agency declared.

World markets are highly volatile in part because of the European debt crisis. Market turmoil was exacerbated by Standard and Poor's decision to cut the U.S. credit rating to AA+ for the first time.

The IEA in a Wednesday report on oil markets warned another economic recession could drag on overall energy demand to the point that oil markets would be in the surplus in 2012.

The IEA called on its members in June to inject strategic petroleum reserves into the market to offset liquidity concerns brought on by declines in oil production from war-torn Libya. The Organization of the Petroleum Exporting Countries had kept official production quotas from 2008 in check despite warnings that high energy prices at the time would drag on global economic recovery.

Oil prices on world markets are down more than 10 percent since the start of August. The IEA in its latest report, The Wall Street Journal reported, said renewed economic concern was no reason for OPEC to close the spigot.

"There is no justification at the present time for OPEC to think of substantially adjusting production downwards," David Fyfe, an oil markets analyst at the IEA, was quoted by the Journal as saying.

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