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IEA Says Oil Prices Okay

The International Energy Agency in Paris, France, said this week that the world?s oil market can withstand the rising price of oil, but also warned that the public is already overburdened and the situation is very volatile. The agency said in its monthly report, released Monday, that "For the time being, the market can cope with current outages, but in the light of the many possible threats to output, including the current hurricane season, there is little doubt that the upstream spare capacity cushion remains thin."

In fact, the IEA (not to be confused with the Vienna-based IAEA) expressed surprise the global price of oil has not increased higher than projected, considering the current string of bad news affecting oil supplies such as pipeline shutdowns and a war in the Middle East. After a leak caused by corrosion was discovered last week, British Petroleum American (BP America) closed down its pipeline at Prudhoe Bay, Alaska. As a result, BP was forced to cut down its daily oil production by 400,000 barrels because of the shutdown.

Among the other problems known to be affecting oil supplies are recurrent production problems in Nigeria, where 750,000 barrels per day are affected, the ongoing security situation in Iraq that is seen as a growing civil war and tensions between Venezuela, the world`s fourth largest producer of oil, and the United States ? tensions being sparked by firebrand Venezuelan president Hugo Chavez spouting anti-US hatred and courting US foes.