USA DOE to Repurchase Up to 3MM Barrels of Oil for SPR

The U.S. Department of Energy (DOE) has announced that it will purchase up to three million barrels of oil for the Strategic Petroleum Reserve (SPR).

The move is in continuation of the Biden-Harris Administration’s three-part replenishment plan, the DOE outlined in a statement posted on its website. This three-part replenishment strategy includes direct purchases with revenues from emergency sales, exchange returns that include a premium to volume delivered, and securing legislative solutions that avoid unnecessary sales unrelated to supply disruptions so as to strategically maintain volume, the DOE noted in the statement.

“[This] announcement advances the President’s replenishment strategy following his historic release from the SPR to address the significant global supply disruption caused by Putin’s war on Ukraine and provide a wartime bridge for domestic production to increase,” the DOE said in an organization statement.

“DOE is committed to executing an SPR replenishment strategy that provides the best deal for taxpayers - aiming to repurchase crude at a lower price than the average of about $95 per barrel it was sold for in 2022, while strengthening energy security by providing certainty to the industry in a way that helps encourage near-term supply,” the DOE added, noting that it intends to purchase more oil later this year. 

The DOE highlighted in the statement that it has already secured the cancellation of 140 million barrels in congressionally mandated sales scheduled for fiscal years 2024 through 2027. The organization noted that this cancellation has already led to “significant” progress toward replenishment and said it will allow the SPR to have the same number of barrels in reserve by the end of fiscal year 2027 that it would have had emergency barrels not been sold in 2022.  

On March 31, 2022, a White House fact sheet outlined that Biden would announce “the largest release of oil reserves in history, putting one million additional barrels on the market per day on average, every day, for the next six months”.  

“The scale of this release is unprecedented - the world has never had a release of oil reserves at this one million per day rate for this length of time,” the fact sheet noted at the time.

“This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up,” the fact sheet added.

On November 3, the DOE revealed that contracts had been awarded for the purchase of crude oil from the SPR following a notice of sale announced on October 18, 2022. These contract awards completed Biden’s announcement on March 31, 2022, to release 180 million barrels of crude oil to address the significant global supply disruption caused by Putin’s war on Ukraine, act as a wartime bridge for domestic production to increase, and aid in lowering energy costs for American families, the DOE said in an organization statement at the time.

In its latest statement, the DOE highlighted that the SPR continues to be the world’s largest supply of emergency crude oil.

According to the U.S. Energy Information Administration’s (EIA) latest data, weekly U.S. ending stocks of crude oil in the SPR stood at 362.014 million barrels in the week of May 5, 2023. In the week of May 6, 2022, this figure stood at 542.994 million barrels and in the week of May 14, 2021, the figure stood at 630.127 million barrels, EIA data showed.

In its latest short term energy outlook (STEO), which was published earlier this month, the EIA projected that end of period inventories of crude oil in the SPR would hit 345.6 million barrels in both 2023 and 2024. In its previous STEO, which was published in April, the EIA projected that end of period inventories of crude oil in the SPR would hit 345.2 million barrels in both 2023 and 2024.

The SPR was established primarily to reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the U.S. under the international energy program, the DOE’s website notes. The federally owned oil stocks are stored in underground salt caverns at four sites along the coastline of the Gulf of Mexico, the site highlights. 

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