Oil price surges as Greece votes on austerity package

29th June 2011

Brent crude rose from $108.2 to $110.6 by midday prior to the vote by the Greek parliament.

Oil had tanked on Sunday and Monday, says the report, when Western oil consuming nations announced through the International Energy Agency (IEA) an effort to stem the rise in prices. The IEA said it would release 60million barrels of crude on to world markets.

Brent crude, which traded as high as $126.74 in April, sank to $102.44 on Monday as a result – a sudden drop from $113 a week ago.

A spokesman for Henderson says: "The IEA has only released reserves on two previous occasions; following disruption to US production due to damage from Hurricane Katrina, and in the early 1990s during the Gulf War. So why has the IEA decided to release more reserves now?

"The cause has been stated as the ‘sustained, significant disruption' resulting from the Libyan conflict. However, the move has drawn criticism from some OPEC members who believe the release is an attempt to lower the oil price rather than a response to a genuine supply shortage.

"This has certainly been a fortunate, if not deliberate, side-effect of the IEA's decision. Brent crude futures rose from $80 a barrel in the autumn to more than $125 a barrel at the end of April, a level many economists feared would place a significant drag on an economic recovery/growth.

"However, there are some members of OPEC that see the need for lower prices. For example, Saudi Arabia has called for an increase in output, although cynics suggest this is simply an attempt to rebuild relationships with the US rather than concern for the global economy."

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