(Reuters) - Global oil inventories grew over the last two
months despite the loss of further supplies from
, according to a U.S. report that gave leeway for the Obama
administration to press ahead with sanctions on the OPEC
The Energy Information Administration report, required every
60 days by the Iran sanctions law President Barack Obama signed
in December, gave a mostly positive assessment of global oil
supplies, which typically build at this time of year.
World oil and motor fuel supplies exceeded demand by 500,000
barrels per day in March and April, the EIA said, allowing
consumer countries to build cushions against any potential losses
from U.S. and EU measures against Tehran.
Inventories were helped by strong production from
, which pumped 9.8 million barrels per day, about 900,000 bpd
more than it did in March and April a year ago, it said.
"The report provides that comfort level that (the
administration) can continue toward implementation of the
sanctions without fear that the market is poised to go crazy for
them," said David Pumphrey, fellow at Center for Strategic and
International Studies and former Energy Department official.
The sanctions aim to choke funding to Tehran's nuclear program
by slowing transactions between oil-consuming countries and the
Central Bank of Iran. The West contends Iran is trying to build a
nuclear weapon, while Tehran says the program is strictly for
POTENTIAL SPR TAP
The supply picture was not entirely sunny.
The report said Iranian oil output has already been hit by
sanctions, and that several non-OPEC crude disruptions worsened
in March and April. The disruptions add to worries the global oil
market could tighten as - outside of Saudi Arabia - it lacks
significant production capacity. They also support the
possibility the administration could tap emergency oil stock
piles to cool down high fuel prices.
Republicans have slammed Obama over high gasoline prices that
have hurt consumers as they struggle with a fragile economic
recovery ahead of the November 6 election.
The U.S. sanctions and a pending EU embargo on Iranian oil
have already trimmed the OPEC member's oil output by 400,000
barrels per day compared with a year ago, the report said.
"EIA believes that Iran's total liquids production capability
has been declining due to its inability to carry out investment
projects," necessary to offset natural oil well decline rates, it
In addition, Canadian oil supply problems and ongoing
disruptions from Sudan, South Sudan,
, and Yemen compounded worries that petroleum markets could
tighten ahead of the June 28 deadline, when Obama is allowed to
sanction foreign banks over oil-related transactions with the
Central Bank of Iran.
But the White House is unlikely to slow the process ahead of
talks in Iraq late next month between Iran and six major powers
to settle the nuclear dispute, backers of the sanctions said.
"The last thing the administration would do ahead of Baghdad
talks would be to show any sign that they are not full steam
ahead on oil market sanctions," said Mark Dubowitz, the head of
the Foundation for Defense of Democracies, a lobbying group for
tough Iran sanctions.
The administration has said it is considering all options to
combat high gasoline prices, including a release of crude from
the U.S. Strategic Petroleum Reserve.
"Nothing in today's report undercuts the administration's
stated motivations for drawing reserves," said Kevin Book, an
analyst at ClearView Energy Partners in Washington.
(Reporting also by Ayesha Racoe. Editing by M.D. Golan and