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Oil price down after IEA open reserves

The price of oil has dropped by $6 per barrel today after The International Energy Agency (IEA) opened up oil reserves.

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The IEA are to release an extra 60m barrels from emergency crude supplies.

The UK is contributing 3m barrels, and half of it is coming from the US Strategic Petroleum Reserve.

The IEA are to release the 60m barrels at a rate of 2m barrels per day, in an effort to reduce the impact of global oil demand on the world economy.

This comes recently after the nations of the OPEC cartel were divided over whether to up oil output in a meeting earlier this month, causing oil prices to rise further.

The IEA said it was to replace the 1m barrels per day lost when civil war broke out in Libya earlier this year. Saudi Arabia however have already upped their output to cover these losses.

This would indicate that the IEA’s surprise decision has an economic motive, and is a compensation to the refusal of OPEC to up production in an effort to lower prices.

This is only the third time in history that the IEA is to dip into its 1.6bn emergency oil reserve.

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