US Department of Energy begins buying oil as strategic reserve despite high prices**
Date
7/11/2024 8:22:48 AM
(MENAFN) The US Department of Energy has initiated a request to purchase up to 4.5 million barrels of oil to bolster the Strategic Petroleum Reserve (SPR), even as current oil prices surpass the targeted purchase price. This move represents the latest effort by the Biden administration to replenish the reserve, following the historic decision in 2022 to sell 180 million barrels amidst global supply concerns sparked by Russia's conflict with Ukraine.
The requested oil quantity is intended for delivery to the Bayou Choctaw site in Louisiana from October through December, with bids scheduled to close on July 18. The Department of Energy specified its aim to acquire oil at approximately USD79 per barrel, a price aimed at mitigating costs compared to the average price of USD95 per barrel realized during the massive 2022 sale. However, this target remains significantly lower than the recent settlement price of USD82.10 per barrel for West Texas Intermediate crude on Wednesday.
Since the 2022 sale, which marked the largest-ever withdrawal from the emergency reserve, the Department of Energy has repurchased approximately 38.6 million barrels. Efforts have also been made in collaboration with Congress to halt further scheduled sales from the SPR, which had previously been approved by lawmakers across party lines.
This strategic move underscores the administration's commitment to maintaining the SPR as a vital resource for energy security, despite current market conditions. The initiative aims to enhance the nation's preparedness to mitigate future supply disruptions and stabilize energy markets, reflecting ongoing efforts to manage strategic reserves amidst fluctuating global oil dynamics and geopolitical uncertainties.
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