US seeks 6 million barrels of oil for strategic oil reserve

By Timothy Gardner

WASHINGTON (Reuters) – The United States on Friday issued two tenders to buy a total of 6 million barrels of crude oil for the Strategic Petroleum Reserve as President Joe Biden’s administration replenishes stocks after a sell-off historic in 2022.

The Department of Energy said the oil was scheduled to be delivered to SPR’s Bayou Choctaw site in Louisiana from September to December.

This year, the department adopted a strategy of directly purchasing oil for reserves instead of basing the purchase price on a price index. He said the move and the completion of maintenance at Bayou Choctaw helped him purchase 38.6 million barrels of oil at an average price of $77 per barrel.

The Biden administration announced a record 180 million barrels of SPR sales in 2022 following Russia’s invasion of Ukraine. The move was intended to control gasoline prices, which soared to more than $5.00 per gallon after the invasion. But it also brought the SPR level down to a 40-year low.

Energy Secretary Jennifer Granholm said in an exclusive interview Tuesday that the department could accelerate the SPR replenishment this year, beyond a pace of about 3 million barrels per month.

“It could go further,” Granholm told Reuters in Washington. She said two of SPR’s four locations on the Texas and Louisiana coasts were under maintenance, slowing purchases.

“All four sites will be back up and running by the end of the year, so one can imagine the pace picking up depending on the market,” Granholm said.

The DOE wants to buy oil for the reserve at around $79 per barrel. West Texas Intermediate crude futures were well below that figure at around $75 on Friday and are expected to see a third consecutive weekly loss on concerns over demand.

(Reporting by Timothy Gardner; Editing by Marguerita Choy)

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