The International Energy Agencys (IEA) unexpected announcement to release 60mn barrels of crude from strategic oil stocks over the next month have negatively impacted oil prices.
The IEA decision sparked a steep sell-off, with Brent North Sea crude for delivery in August falling by a heavy US$6.95 (six per cent) in value last Thursday.
For IEA, the energy arm of the Organisation for Economic Cooperation and Development, the decision was aimed at replacing output from Libya which has seen its oil production virtually come to a halt during the uprising against Colonel Muammar Gaddafi.
"This supply disruption has been underway for some time and its effect has become more pronounced as it has continued," the IEA said.
The IEA has repeatedly called on OPEC to pump more crude to prevent high oil prices threatening the global economic recovery. OPEC, which pumps 40 percent of global oil supplies, decided earlier this month to maintain its output levels.
The move is only the third time in history that the 28-member group of oil-importing countries has taken such a step. Iran's oil minister recently said the IEA was in breach of the principles on which it was founded by intervening in what he sees as well supplied oil markets.
Mohammad Aliabadi, who is also president of OPEC said: "There is no additional need for supply in the market," according to AFP.
