The Governing Board of the International Energy Agency last week discussed the current restraints on world oil supply
, the significant decline in oil stocks worldwide and the sharp rise in oil prices. They expressed concern that the tightening supply situation could feed inflation and slow economic growth, thereby giving rise to problems particularly for developing countries.
The Board noted that industry oil stocks worldwide were lower at the end of last year than at any time in the past decade. Yet demand is constantly growing. The present gap between demand and supply means that no surplus oil is available to build stocks and that they continue to be drawn down to meet current requirements. To restore stocks by the end of 2000, even to the very low levels of 1999, an early and substantial increase in production will be needed.
The Board was reassured by growing signs that producers are aware of the implications of the tightening oil market. Members recalled, and welcomed, the expressed readiness of some producers to increase production at the start of 2000, had problems arisen from the "millennium bug." They saw this and other recent statements as evidence of the producers' interest in maintaining consumer confidence in the adequacy of oil supply.
The Governing Board said it does not at present contemplate any collective drawdown of the strategic stocks of oil held under the terms of the 1974 International Energy Program as a safeguard against any abrupt loss of world oil suppli
es. The IEA will closely monitor the developing situation, including through contact with producing countries; and will reinforce its work on energy efficiency and energy diversification.