The U.S. government is purchasing an additional 3 million barrels of crude oil to replenish the nation’s Strategic Petroleum Reserve (SPR), the Department of Energy announced on Monday. This acquisition comes as the administration works to slowly rebuild the stockpile after the largest sale in history occurred in 2022.
The oil, scheduled for delivery to the SPR in November, is being purchased at an average price of $77.69 per barrel, according to the department’s statement.
The replenishment effort is necessary after President Joe Biden ordered the sale of 180 million barrels from the SPR over six months in 2022, aiming to control fuel prices in the wake of Russia’s invasion of Ukraine. The DOE has already bought back 38.6 million barrels and states it will continue to seek opportunities to repurchase oil for the stockpile.
The Biden administration has indicated that it plans to buy back oil for the SPR at prices around $79.99 per barrel or lower.
The U.S. government established the SPR after the Arab oil embargo in the 1970s sparked concerns about supply disruptions and their potential to harm the economy.
In Monday’s announcement, the DOE awarded contracts to BP Products North America Inc. for 600,000 barrels, Macquarie Commodities Trading US LLC for 1.5 million barrels, and Atlantic Trading & Marketing for 900,000 barrels.
The Biden administration has outlined a three-pronged strategy to refill the SPR, which includes buying back oil, the return of oil previously loaned from the reserve to companies, and the cancellation of congressionally mandated sales of 140 million barrels of SPR oil through 2027, which had been approved by both Democratic and Republican lawmakers to fund government programs.
Last year also the U.S. Department of Energy finalised contracts to purchase 3 million barrels of crude oil to help replenish the nation’s Strategic Petroleum Reserve (SPR). This acquisition comes after the largest sale in the SPR’s history took place last year.
According to the department, the oil was purchased at an average price of $77.31 per barrel for delivery to the Big Spring site in Texas. This price is below the average of $95 per barrel that oil sold for in 2022.
The purchases are part of efforts by President Joe Biden’s administration to restore the SPR following sales last year, including a record release of 180 million barrels. These sales were conducted to help control oil prices after Russia, a major crude exporter, invaded Ukraine.
With this latest purchase, the U.S. has now acquired about 14 million barrels for replenishment purposes after last year’s sales. Around 4 million barrels are expected to be returned to the SPR by February as oil companies return borrowed oil through a swap arrangement.