The US Department of Energy (DOE) is seeking up to 4.5 million barrels (mbbl) of oil for the country’s Strategic Petroleum Reserve (SPR) from October through December.
Additionally, the department is now arranging the return of nearly 4mbbl barrels of exchanged oil as part of its plan to replenish the SPR, aimed at helping “bring down prices for American consumers and businesses”.
The department recently offered to purchase oil to restock the SPR, with US Energy Secretary Jennifer Granholm, according to a US news outlet, saying in June that the department could quickly replenish the SPR this year.
US President Joe Biden authorised the sale of 180mbbl from the emergency reserve in 2022, marking the largest sale ever, in response to the Russian invasion of Ukraine.
“The DOE continues to aim for $79 per barrel or less, significantly lower than the average of about $95 per barrel DOE received for 2022 emergency SPR sales,” the department said in a statement.
However, according to Reuters, the price of $79 is significantly less than the $82.10 per barrel that the West Texas Intermediate benchmark closed at on Wednesday. This price increase occurred during the peak summer driving season in the US and followed a surge in US refining activity last week.
The department has bought 38.6mbbl of oil at an average price of $77 per barrel for the delivery to the Big Hill SPR site.
It has also acquired nearly 40mbbl and completed the Bayou Choctaw's Life Extension 2 Project.
According to the body, the DOE's plans are part of its strategy to make requests for oil when prices are “favourable to taxpayers”.
“DOE will continue to evaluate options to refill the SPR while securing a good deal for taxpayers, taking into account planned exchange returns and market developments,” the government body said.
So-called bids for solicitation are due on 18 July 2024.
The SPR is stored at four sites on the coasts of Texas and Louisiana, but two of those have been undergoing recent maintenance.
The SPR, the world's largest supply of emergency crude oil, was established to reduce the impact of disruptions in supplies of petroleum products.
According to data from the US government, federally-owned oil stocks are stored in huge underground salt caverns at four sites along the coastline of the Gulf of Mexico. It has an authorized storage capacity of 714 million barrels.
The Secretary of Energy may authorise "limited releases in the form of exchanges with entities that are not part of the Federal Government."
This allows the SPR to negotiate exchanges where it will ultimately receive more oil than it released.
