The release of an emergency supply of oil to the market has received a mixed response from experts, with some arguing that the high oil prices seen in recent months have held back economic recovery while others say it reflects a political struggle.
“High prices are the root of all evil so from that respect this is a welcome relief for the world economy," Carl Weinberg, chief economist at High Frequency Economics, told CNBC Friday.
"It is good news for the US economy, for the UK consumer but everything that is good news for one person is bad news for someone else.
It’s good to relive those short-term woes of high energy prices and I welcome that,” Weinberg added.
The International Energy Association said on Thursday it would release 60 million barrels of government-held oil stocks immediately to the market for only the third time in its history.
Many experts view the move as politically strategic rather than having a significant impact on the global oil supply and relieving the tight supply demand dynamic, as 60 million barrels a day accounts for around 17 hours of world oil consumption.
Christoph Eibl, CEO at Tiberius Group, dismissed the IEA’s reason that the move to release these supplies was about ensuring stability for the global economy.
“There is absolutely no scarcity to the oil supply, why didn’t they do this earlier?" Eibl told CNBC. "They did it now because OPEC had their meeting and this is about a power struggle between the US and the IEA. There is no reason why they should release strategic stock piles.” He added that in the long term oil prices would stay high.
“We would say a range of $100-$110 a barrel is more realistic longer term,” Eibl said.
OPEC members have warned that the IEA release could backfire.