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The federal government plans to buy some 12 million barrels as part of efforts to refill the strategic petroleum reserve after drawing down more than 200 million barrels from it last year.
This is according to an unnamed source that spoke to Reuters and that also suggested total purchases this year could exceed 12 million barrels.
Earlier this month, the Department of Energy announced it had bought 3 million barrels of crude for the strategic petroleum reserve and planned to buy another 3 million.
"These 3 million barrels are being purchased for an average price of about $73 per barrel, lower than the average of about $95 per barrel that SPR crude was sold for in 2022, securing a good deal for taxpayers," the Department of Energy said.
In October of last year, the administration announced that it would repurchase crude oil for the reserve when prices were at or below about $67-$72 per barrel.
The move would be a dual-purpose one in that not only would it replenish the nation’s depleted reserves, but it would boost demand when prices were low instead of sending them into orbit at a time of regular prices.
Currently, the strategic petroleum reserve is at the lowest level since 1983, at 372 million barrels of crude, which has prompted some observers to warn about a possible compromise in the country’s energy security.
The first 3 million barrels should be delivered to the SPR in August and another 3 million—yet to be contracted—should be delivered a month later. This leaves three months for the Department of Energy to source and purchase another 6 million barrels at a price it can afford.
According to a spokesman, the DoE "will continue to seek opportunities for additional repurchases as market conditions and the constraints of SPR operations allow."
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.