World oil prices slumped on Friday as the International Energy Agency (IEA) and the United States government pledged to release 60-million barrels of crude after Hurricane Katrina severely disrupted supplies.
The IEA said that all its member states agreed to make available to the market two million barrels of their strategic oil reserves a day for an initial period of 30 days to offset disruptions from Katrina.
US Energy Secretary Samuel Bodman said the US will sell 30-million barrels of crude oil from its own strategic petroleum reserve on the market from next week.
New York’s main contract, light sweet crude for delivery in October, fell $1,82 to $67,65 per barrel in early deals.
On Tuesday, it had hit a historic high of $70,85, a day after Katrina battered the Gulf of Mexico.
In London, the price of Brent North Sea crude for October delivery lost $2,12 to $65,60 per barrel on Friday.
It hit a record $68,89 on Tuesday.
IEA executive director Claude Mandil said all 26 IEA member countries will take ”collective action in response to the interrupted oil supplies in the Gulf of Mexico caused by Hurricane Katrina”, the Paris-based agency said in a statement.
Hurricane Katrina battered oil platforms in the Gulf of Mexico on Monday, leaving US refineries short of crude to turn into gasoline (petrol) and heating fuel.
Prices had initially fallen by more than a dollar on Friday, as crude production increased slightly in the US, the world’s biggest consumer of energy.
Colonial Pipeline, a transporter of petroleum products, on Thursday said that its network of pipelines between the Gulf of Mexico and the US north-east would be operating at 61% capacity from Friday, compared with 40% the day before.
It added that capacity should rise to between 75% and 86% by the middle of next week. Meanwhile, energy giant Royal Dutch Shell said on Thursday that its Motiva refinery in Convent, Louisiana, could restart refining its capacity of 225 000 barrels per day in about a week.
However, concerns remained on Friday.
US motorists’ organisations have reported panic buying and shortages at petrol stations, with nine major refineries on the Gulf Coast shut down by Katrina and pipelines from the south operating at sharply reduced capacity.
Combined, the nine refineries’ production capacity is 1,83-million barrels of oil a day — about 10% of total US output.
European Union foreign policy chief Javier Solana said on Friday that European nations stand ready to provide the United States with whatever it needs, including oil, in the aftermath of Katrina.
According to US government data, the hurricane has shut down an estimated 90% of crude production and 79% of natural-gas output in the Gulf of Mexico — which accounts for a quarter of total US oil output.
The US keeps 700-million barrels of oil stored in four underground salt caverns on the Texas and Louisiana coasts to cushion oil markets during supply disruptions. The reserve was created during the 1970s oil shocks.
The IEA, grouping industrialised nations with strategic oil reserves, holds an estimated 4,1-billion barrels of public and industry oil stocks, of which about 1,4-billion barrels are government-controlled for emergency purposes. — Sapa-AFP