Crude oil prices on the rise
Oil rigs extract petroleum in Culver City, California. If the U.S. falls in production, Iran is ready to export more crude oil.
David Brancaccio: The price of crude oil is on the rise again today after a sharp drop Thursday. This after a denial by the U.S. and the U.K. that they're planning to release some of their strategic oil reserves.
Joining us now is Marketplace's European bureau chief Stephen Beard in London. Hello.
Stephen Beard: Hello David.
Brancaccio: What's going on here, because U.S. and Britain been talking about releasing some of this oil?
Beard: That's right. Prime Minister David Cameron says that he and President Obama discussed the possibility of both countries doing this -- releasing some of their stockpiles of oil. That, as you say, sent the price of crude down yesterday; now it's back up again, after both governments made it clear they haven't agreed to do this -- yet.
Brancaccio: If they go ahead and do in fact release some oil, would that affect price?
Beard: That's debatable. There's no major shortages of oil in the U.S. or Europe right now -- it's speculators that have driven the price up, largely on the back of concerns about Iran. This talk of selling of the reserves is designed, of course, to scare off the speculators.
But Samuel Ciszuk of the consulting firm KBC Energy Economics says if they did sell off some of the stockpiles, it would have only a temporary effect on the price of oil.
Samuel Ciszuk: There might be a dip, but it would be a very short-term dip. And if none of the underlying causes for the price rise are actually addressed, well then we will just end up with smaller stockpiles -- i.e. less security -- when this is over.
And he says it's worth remembering that although the U.S. has by far the biggest oil stockpile in the world -- 700 million barrels worth -- it's only sufficient to keep the U.S. going for a month.
Brancaccio: Marketplace's Stephen Beard, live from London.