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Page last updated at 09:47 GMT, Friday, 16 March 2012

Oil reserve release 'political'


David Cameron and Barack Obama have discussed the possibility of releasing emergency oil reserves in order to cut prices at the fuel pumps.

Nick McGregor, oil analyst at Redmayne Bentley stockbrokers, explained that worldwide there are four billion barrels in reserve which is 50 days' worth of the world's oil consumption.

He said that even if a significant amount of oil reserves were released it would have a temporary effect.

Mr McGregor pointed out that "you can't change the pattern of supply and demand and any benefit would be temporary" adding that any effect on price would last a matter of weeks as "markets could absorb this very quickly".

"It doesn't stack up in the long run", he said, explaining that there are "obligations to maintain supplies and reserves at a certain level" of 67 and a half days' worth of national consumption so they could only release the excess which, he said "won't make a sustained difference".

He told the Today programme's Sarah Montague that the release of oil reserves is usually "done to meet specific supply disruptions" like the Libyan issue last year.

He said that this was "more political", a point with which Tim Yeo, the Conservative chairman of the Energy and Climate Change Committee, agreed.

Mr Yeo said this was "entirely about the US election" as petrol prices are an "incredibly sensitive" issue for American voters.

A rise in US domestic oil prices is a major blot on the horizon of Barack Obama's presidential campaign.

He admitted that "we are seeing a spike in prices but that's mainly because of a long-term uptrend in oil prices".

But he believed the "measured comment" made by David Cameron is "entirely appropriate" in the context of an escalation of the situation in Iran.

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