The US Department of Energy (DOE) has announced that it will buy up to three million barrels of oil for the Strategic Petroleum Reserve (SPR).
The move is a continuation of the Biden-Harris Administration’s three-part replenishment plan, the DOE described in a statement posted on its website. This three-part replenishment strategy includes outright purchases with emergency sales proceeds, exchange refunds that include a premium on volume delivered, and ensuring legislative solutions that prevent unnecessary sales unrelated to supply disruptions to strategically maintain volume, he noted. the DOE in the statement. .
“[This] The announcement advances the president’s replenishment strategy following his historic release of the SPR to address the significant global supply disruption caused by Putin’s war in Ukraine and provide a wartime bridge for domestic production to increase.” , the DOE said in a statement from the organization.
“DOE is committed to executing an SPR replenishment strategy that provides the best deal for taxpayers, with the goal of buying back crude at a price below the average of about $95 per barrel for which the 2022, while strengthening energy security by providing certainty to the industry in a way that helps encourage near-term supply,” added the DOE, which noted that it intends to buy more oil later this year .
The DOE highlighted in the statement that it has already achieved the cancellation of 140 million barrels in sales ordered by Congress planned for fiscal years 2024 to 2027. The organization noted that this cancellation has already led to progress “significant” toward the replenishment and said it will allow the SPR to have the same number of barrels in reserve at the end of fiscal year 2027 that it would have had it not sold the emergency barrels in 2022.
On March 31, 2022, a White House briefing paper described Biden announcing “the largest release of oil reserves in history, putting an additional million barrels on the market, on average, every day for the next six months “.
“The scale of this release is unprecedented: the world has never had a release of oil reserves at this rate of one million per day over this time period,” the fact sheet noted at the time.
“This record release will provide a historic amount of supply to bridge the gap until the end of the year when domestic production ramps up,” the fact sheet adds.
On November 3, DOE disclosed that contracts had been awarded for the purchase of SPR crude following a notice of sale announced on October 18, 2022. These contract awards completed the announcement of Biden on March 31, 2022 to release 180 million barrels. of crude oil to address the major disruption in global supply caused by Putin’s war in Ukraine, act as a wartime bridge to boost domestic production and help lower energy costs for American families, he said the DOE in a statement from the organization at the time.
In its latest statement, the DOE highlighted that the SPR remains the largest emergency crude oil supply in the world.
According to the latest data from the US Energy Information Administration (EIA), US weekly ending crude oil inventories in the SPR stood at 362.014 million barrels for the week of May 5, 2023. The week for May 6, 2022, that number stood at 542.994 million barrels and for the week of May 14, 2021, the number stood at 630.127 million barrels, EIA data showed.
In its latest Short-Term Energy Outlook (STEO), which was released earlier this month, the EIA projected that ending crude oil inventories in the SPR would reach 345.6 million barrels in both 2023 and 2024. In its previous STEO, which was released in April, the EIA projected that end-of-period crude inventories in the SPR would reach 345.2 million barrels in both 2023 as well as 2024.
The SPR was established primarily to reduce the impact of disruptions in the supply of petroleum products and to meet US obligations under the international energy program, the DOE website notes. Federally-owned oil reserves are stored in underground salt caverns at four locations along the Gulf Coast, the site notes.
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