WASHINGTON – The Bush administration said on Tuesday it was prepared to act quickly to release emergency crude oil reserves if needed to offset any disruption to Middle East supplies in the event of war with Iraq.

World crude oil prices have recently soared to two-year highs on fears of a US military strike against Iraq, the world’s eighth largest oil exporter.

“We will and can act quickly to use the Strategic Petroleum Reserve to fortify efforts by producers to offset any severe disruption if it is needed,” Energy Secretary Spencer Abraham told law-makers at a Senate Energy Committee hearing.

The United States has said it will disarm Iraq by force if necessary, despite widespread international opposition to war and concern that rising energy costs could smother a weak world economy.

New York oil prices fell after Abraham’s comments, ending the day down 42 cents or 1.1 percent at $36.06 a barrel.
The Strategic Petroleum Reserve was created in 1975 and has about 600 million barrels of crude oil stored in underground caverns in Texas and Louisiana. It can be drawn at a rate of 4.3 million barrels a day for 90 days, before the rate drops as storage caverns are emptied.

Oil prices are also up and US crude inventories are down because of the disruption in Venezuelan oil exports due to a two-month strike in that country which ended earlier this month.
Abraham said the crisis in Venezuela “has passed,” and that the country’s oil exports should return to normal within 60 to 90 days.

Source: www.oil.com