Nations close to a deal on tapping reserves

France said governments are moving closer to an agreement on a release of oil from emergency stockpiles to stem gains that have driven prices to their highest levels in three years. The prospects of an accord between the US and Europe on tapping strategic reserves are "good", French Premier Francois Fillon told France Inter Radio yesterday. US President Barack Obama and Britain's Prime Minister David Cameron discussed the move earlier this month. France will only use its oil reserve in coordination with other countries, Finance Minister Francois Baroin said on Europe 1 radio. "There is definitely increasing talk about releasing stocks, and now they are talking so much, it's going to be hard not to do something," Olivier Jakob, managing director at consultants Petromatrix GmbH in Zug, Switzerland, said by phone. "Oil prices are rising, which is a threat to the economic recovery, so pressure is growing on governments. The Saudis aren't acting, so the only thing left is to release stocks." Rising oil costs threaten to crimp the global econ-omic recovery and price pressure may increase as the US and European Union tighten sanctions against Iran, forcing nations to cut purchases of crude from the Islamic republic. The Paris-based International Energy Agency, adviser to 28 consuming nations, coordinated the release of 60 million barrels of crude and oil products in June after Libyan output was disrupted by an armed uprising against Muammar Gaddafi. Oil has risen 12 per cent this year on concern that demand will outstrip supply amid tightening sanctions on Iran and output disruptions in Sudan, Yemen, Syria and the North Sea. Brent crude for May settlement on the ICE Futures Europe exchange in London was at $124 a barrel, down 16 cents, in late morning yesterday. Iran, the second-largest producer in the Organisation of Petroleum Exporting Countries after Saudi Arabia, may lose crude exports of as much as 1 million barrels a day because of the ban by the US and the EU, the IEA said in a report this month. The Obama administration hasn't made a decision on whether to tap its Strategic Petroleum Reserve nor made any specific proposal to allies, a White House official said on Wednesday. "While this is an option that remains on the table, no decisions have been made and no specific actions have been proposed," Josh Earnest, deputy White House press secretary, said in Washington. From gulfnews