The leaders of the world's biggest economies are making preparations for another release of crude oil from their strategic reserves - a move that stopped prices from spiralling out of control last year - as talks over Iran's nuclear stance continue.
The heads of the Group of Eight met at Camp David in the United States on Saturday to discuss, among other things, a diplomatic solution to the stand-off over Iran's nuclear programme.
Keen to prevent increasing oil prices from weakening their hand in negotiations with Iran that resumed this month, the leaders of the world's major industrialised nations have instructed the International Energy Agency to ready itself for a release of stockpiles.
The agency, which represents the bulk of the big crude-consuming countries, announced a release of 60 million barrels of oil into the market last June after the civil war in Libya stopped that country's exports, causing a sharp rise in crude prices on international markets.
"Looking ahead to the likelihood of further disruptions in oil sales and the expected increased demand over the coming months, we are monitoring the situation closely and stand ready to call upon the International Energy Agency to take appropriate action to ensure that the market is fully and timely supplied," the G8 said on Saturday.
If talks are unsuccessful and measures against Iran are upheld, fears of a supply impasse could cause prices to shoot up again.
Shamseddin Hosseini, Iran's economy minister, said yesterday that crude prices would rocket to as much as US$160 a barrel if US and European Union sanctions, as well an EU embargo on Iranian oil, were upheld.
"There will be a considerable increase in international oil market prices," said Mr Hosseini.
Some experts predict that a seasonal upswing in demand will cause prices to rise regardless of the outcome of the talks.
"Prices should start … gradually moving higher through the coming few months, against a backdrop of improving fundamentals and stretched spare capacity," analysts at Barclays Capital said in a research note.
Inventories have risen in recent months, as Opec has responded to lower Iranian exports with a substantial rise in production.
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