The US will buy oil for the strategic reserve
20.12.2022 - 11:00
The US Department of Energy will begin purchasing crude oil for the Strategic Petroleum Reserve (SPR).
Oil will begin to be bought back, as its price will fall below the level at which it was sold. The initial purchase will be up to 3 million barrels of crude oil, Upstream reports.
Over the past 12 months, the US government has released record volumes of oil from reserves to meet demand following the COVID-19 pandemic and Russia’s invasion of Ukraine, which led to a global energy crisis.
Oil was selling at $96/barrel, and now that Brent and WTI oil prices are falling below $80/barrel, the US government wants to secure a good deal for taxpayers.
The purchase of the initial 3 million barrels will allow the US to test a new approach to replenishing the Strategic Reserve, which allows the purchase of crude oil at a fixed price. Under the plan, producers should see that the price they receive from the sale of SPR will be fixed and not be affected by market volatility.
The US Department of Energy will receive procurement applications until 10:00 a.m. on December 28. Contracts will be awarded until January 13, 2023, and deliveries to SPR’s Big Hill site in Beaumont, Texas, will take place in February.
