US to buy 4.65 million bbls of crude for SPR

The US Department of Energy (DOE) announced two tenders to purchase up to 4.65 million bbls of crude oil for deliveries from October through December to replenish its Strategic Petroleum Reserves (SPRs).

PHOTO: A silhouette of an oil pump jack with the US flag in the background. Getty Images

The US energy department intends to buy another 4.65 million bbls of crude at an average price of $79/bbl or below. This is the fourth SPR purchase announcement for this year. In June, it purchased 6 million bbls of crude oil for deliveries from September to December.

The DoE announced two tenders for the purchase, one for 3.9 million bbls from US oil giant Exxon Mobil, and another for 750,000 bbls from Macquarie Commodities Trading US.

These new tenders are in addition to the 9 million bbls already secured for purchase into the Big Hill storage facility this year, scheduled to be delivered between September and November.

The energy department has so far purchased 38.6 million bbls of crude oil for the SPR at an average price of $77/bbl. The crude oil is stored at the Bayou Choctaw site in Louisiana.

The SPR is one of the largest emergency crude oil reserves. When the US buys oil to fill the SPR, it removes significant quantities from the market, tightening supply and potentially raising prices.

The oil stocks are stored in underground salt caverns at four sites in Texas and Louisiana.

The DOE further aims to avoid the unnecessary sale of SPRs. It has already cancelled the 140 million bbls of congressionally mandated SPR sales scheduled for 2024 through 2027.

The SPRs stood at around 374 million bbls as of 19 July, marginally higher than a year ago, according to US Energy Information Administration (EIA) data. These reserves remain much lower compared to peak levels of 555 million bbls seen in April 2022.

By Aparupa Mazumder 

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