US to buy another six million barrels of oil to replenish emergency reserve

Washington to pursue additional repurchase opportunities as market conditions allow

Strategic Petroleum Reserve was created to protect the US economy from severe petroleum supply interruptions through the acquisition, storage, distribution and management of emergency stocks. Reuters

The US is buying another six million barrels of crude oil for the Strategic Petroleum Reserve as it replenishes its emergency stocks.

The latest purchase, with receipts scheduled for October and November, is the “third solicitation” that the US Department of Energy (DoE) has issued this year, it said in a statement on its website on Friday.

The announcement “advances the President’s replenishment strategy following his historic release from the SPR to address the significant global supply disruption caused by [Russian President Vladimir] Putin’s war on Ukraine”, the DoE said.

The “DoE will pursue additional repurchase opportunities as market conditions allow”.

Last year, the world’s largest economy released 180 million barrels from the reserve to address disruption of supply following Russia’s military operation in Ukraine.

The administration’s replenishment strategy meant a "good deal for the American taxpayer”, the DoE said.

“During the first two solicitations, for a total of 6.3 million barrels, the average price paid was $72.67 per barrel – much lower than the average of about $95 per barrel that SPR crude was sold for in 2022.”

The reserve is the world’s largest supply of emergency crude oil, and the federally owned oil stocks are stored in underground salt caverns at four sites in Texas and Louisiana along the Gulf of Mexico coastline.

The Bryan Mound Strategic Petroleum Reserve in Freeport, Texas. Reuters

Set up in 1975, the reserve’s purpose is to protect the US economy from severe supply interruptions through the acquisition, storage, distribution and management of emergency petroleum stocks.

“DOE continues to prioritise the operational integrity of the SPR to ensure that the SPR can continue to meet its mission as a critical energy security asset.”

Last month, the DoE said it will add more than six million barrels of oil to its stockpiles to address supply challenges.

Brent, the benchmark for two thirds of the world’s oil, settled 2.55 per cent higher at $78.47 a barrel at the close of trading on Friday, while West Texas Intermediate, the gauge that tracks US crude, was up 2.87 per cent at $73.86 a barrel.

Oil prices remained volatile since last year after Russia attacked Ukraine.