US Buys 6 Million Barrels Of Oil For Strategic Petroleum Reserve

The U.S. Department of Energy announced that it purchased 6 million barrels of crude oil for the Strategic Petroleum Reserve (SPR) to protect the nation's energy security.

As per a press release released by the department, the contracts were awarded on Sept. 27, 2024 for delivery of 1.5 million barrels of sour crude, which is the oil that a lot of U.S. refineries process, each month. The deliveries would be made from February 2025 to May 2025 to the Bayou Choctaw site.

At present, the government has already purchased more than 56 million barrels for the reserve. The average purchase price was $76 per barrel, which is $19 lower than the 2022 sales price of $95. This is in adherence to the commitment of the administration to find a good deal for taxpayers.

The effort is part of the goal of the administration to replenish the stockpiles after President Joe Biden sold 180 million barrels from the reserve in 2022 in order to control prices of fuel in the wake of the Russian invasion of Ukraine.

"This follows the historic release from the SPR to address the significant global supply disruption caused by Putin's war on Ukraine and help keep the domestic market well supplied, ultimately helping to bring down prices for American consumers and businesses," the department's press release stated.

The replenishment strategy was divided into three parts. The first is to purchase with revenues from emergency sales. The second is to exchange returns, and third is to secure legislative solutions that will avoid unnecessary sales, Reuters reported.

U.S. purchased 3.5 million barrels from Exxon Mobil, 2 million from Shell Trading Company and 500,000 from Macquarie Commodities. The department awarded the contracts to the most competitive bids, which met its requirements in terms of quality and specifications.

Analysis from the Department of the Treasury indicates that SPR releases in 2022, along with coordinated releases from international partners, reduced gasoline prices by as much as 40 cents per gallon.

According to the DOE, it has already secured the cancellation of the scheduled sale by congress of 140 million barrels for 2024 to 2027. It also explained the importance of the SPR to the country in its latest statement.

"The SPR continues to be the world's largest supply of emergency crude oil. The federally owned oil stocks are stored in underground salt caverns at four sites in Texas and Louisiana," it stated.

DOE also highlighted how it prioritizes the "operational integrity" of the SPR in order to ensure that it will continue to meet its purpose of being a "critical energy security asset."

"The SPR has a long history of protecting the economy and American livelihoods in times of emergency oil shortages," said the department.