EXCLUSIVE-U.S., Britain to agree emergency oil stocks release | Energy & Oil | Reuters

LONDON, March 15 (Reuters) - Britain has decided tocooperate with the United States in a bilateral agreement torelease strategic oil stocks, two British sources said, in aneffort to prevent high fuel prices derailing economic growth ina U.S. election year. A formal request from the United States to the UK to joinforces in a release of oil from government-controlled reservesis expected "shortly" following a meeting on Wednesday inWashington between President Barack Obama and Prime MinisterDavid Cameron, who discussed the issue, one source said. Britain would respond positively, the two sources said. "We regularly consult with the British on energy issues andany discussion that we had was in that context. We will continueto monitor the situation and consult with them and others," anObama administration official said. Rising world oil prices, up to $125 a barrel for Brent crude, have pushed U.S gasoline prices up sharply this yearand threaten to choke U.S. economic recovery ahead of Obama'sbid for re-election in November. Details of the timing, volume and duration of the emergencydrawdown have yet to be settled but a detailed agreement isexpected by the summer, one of the sources said. Other countries may also be approached by Washington tocontribute, a further source said, Japan among them. Previous emergency oil drawdowns, the latest last year, have been coordinated by the 28-member Paris-based InternationalEnergy Agency (IEA) to meet its mandate to cover substantialsupply disruptions on the world oil market. Libyan oilproduction was closed for much of last year during civil war.....

"The Obama administration can only take so much politicalpain from rising gasoline prices, which pose a serious threat tothe economy and the president's re-election," said Bob McNally,a former White House energy adviser and head of U.S. energyconsultancy Rapidan. "SPR (Strategic Petroleum Reserve) use is more a matter ofwhen than if. The administration strongly desires internationalsupport and coordination from other strategic stock holders, butis encountering stiff resistance from some IEA members who thinkstrategic stocks should only be used for severe supplydisruptions," McNally said. Top U.S. officials including Energy Secretary Steven Chu andTreasury Secretary Timothy Geithner have said publicly in recentweeks that a U.S. oil release is among the options thegovernment is considering.
An official statement is expected to be released shortly.