U.S. Extends License For Transactions With Venezuela's PDVSA
The U.S. Congress is discussing a funding deal that will see Chinese entities prohibited from buying crude oil from the strategic petroleum reserve in the latest push to limit Chinese access to U.S. markets.
The bill follows a sale of about 1 million barrels from the SPR to Unipec America, a U.S. subsidiary of state-owned major Sinopec. That was back in 2022 when the Biden administration unleashed more than 180 million barrels of crude from the SPR to rein in oil prices.
The House is yet to vote on the bill, which allocates funding for half of the federal segments that Congress is in charge of organizing funding for, Reuters reported, but with anti-Chinese sentiments pretty popular among both Democrats and Republicans, its chances appear pretty good.
The massive release of crude oil from the strategic petroleum reserve in 2022 left the reserve at a 40-year low, prompting worry that the U.S. may find itself in trouble in case of a supply emergency.
Some have argued that the SPR is obsolete in light of current U.S. oil production rates, but others have countered with the fact that despite becoming the largest oil producer in the world, the U.S. is still a major importer, too.
A year after the release, the Department of Energy said it would begin buying oil to refill the SPR but purchases have been going slowly, not least because any announcement of a purchase leads to oil prices ticking higher.
These announcements so far have been solicitations for 3 million barrels and there have been 14 of these, not all of them leading to an actual purchase. The Department of Energy has set itself a ceiling of $79 per barrel to initiate a SPR repurchase and while WTI prices were below that for most of last year, this did not result in a lot of purchases.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More