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Oil Prices Top $111 As Biden’s SPR Buyback Plan Leaks

The Biden Administration will purchase 60 million barrels of crude in Q3 in an effort to replace volumes in the U.S. strategic petroleum for the first time in nearly 20 years, CNN reports, after authorizing a record release over six months. 

Citing an unnamed Energy Department official, CNN said what is referred to as a “long-term buyback plan” for oil would be announced later on Thursday. 

Delivery of those first 60 million barrels, according to CNN, would be paid for with revenue received from sales of emergency oil, while the time frame is not specific beyond “future years”. 

Oil jumped to $111.5 per barrel for Brent–the highest price since late March–and over $108 for WTI on news of the buyback plan, along with results of an OPEC+ meeting earlier today in which the cartel refrained from increasing output quotes beyond 423,000 bpd for June. 

The full process for replenishing the SPR will take years. 

Bloomberg cited UBS Group commodity analyst Giovanni Staunovo as saying that the market is now pricing in what amounts to U.S. plans to buy when the market is tight and inventories and spare capacity are low. 

On March 31st, U.S. President Joe Biden authorized the release of 1 million barrels of oil from the country’s strategic reserves per day for six months in a bid to bring down soaring oil prices as a result of Russia’s invasion of Ukraine. 

Over the next six months, the International Energy Agency (IEA) and the U.S. together are set to release a total of 240 million barrels of crude oil from their respective strategic reserves.  

During Thursday’s meeting, OPEC Secretary-General Mohammad Sanusi Barkindo said combined strategic reserve releases would mean that “the equivalent of over 1 mb/d for a period of eight months” would be “made available to the global market”.

By Charles Kennedy for Oilprice.com

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Charles Kennedy

Charles is a writer for Oilprice.com More