The U.S. Administration has awarded contracts to buy 6 million barrels of crude oil for the Strategic Petroleum Reserve (SPR) for deliveries through May 2025, the Department of Energy said this week.
The contracts were awarded last week and are for deliveries of 1.5 million barrels per month between February and May 2025 to the Bayou Choctaw site in Louisiana, following the Request for Proposal (RFP) that was announced on September 18.
In August, the Administration said that the United States would continue to buy crude when prices are in the $70s a barrel or lower and plans to add several million barrels of crude to the Strategic Petroleum Reserve early next year.
At the time of the awarding of the latest contracts for the SPR refill, the U.S. benchmark WTI Crude traded below $70 per barrel.
To date, DOE has directly purchased over 56 million barrels of oil for the SPR at an average price of about $76 per barrel, it said.
“This is nearly $20 per barrel lower than the $95 average sales price for 2022’s emergency sales, meeting the Administration’s commitment to secure a good deal for taxpayers,” the Energy Department said.
“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 replenishment strategy comes in the wake of the SPR’s critical role in stabilizing the market during global supply disruptions, notably the release of more than 180 million barrels of oil from the SPR starting in 2021, as gasoline prices remained high. The Department of Treasury claims that these releases, along with coordinated international efforts, helped reduce gasoline prices by up to 40 cents per gallon in 2022.
The SPR currently houses 375 million barrels of crude—a figure that is 263 million barrels less than oil in the SPR at the beginning of President Joe Biden’s term in office. The Reserve’s total capacity is 714 million barrels of crude.
By Tsvetana Paraskova for Oilprice.com
