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The U.S. Department of Energy says it would like to start purchasing crude oil to at least partially refill the Strategic Petroleum Reserve—but the government is “not the fastest at things,” Christopher Roark, senior crude oil marketing analyst at the U.S. DOE said at a Crude Oil Quality Association meeting.
Roark said the government would like to start buying oil “within the next year, depending on the opportunity.” This will come only after the United States has finished selling the 26 million barrels of crude oil from the SPR that has already been scheduled as required by Congress.
Despite the government not being fast at things, the DoE could “React quickly to the market” if it uses a competitive solicitation process for buying the oil. Roark added that they wanted to be careful not only to get the best deal on any purchased oil, but they also want to be careful not to sway the course of the markets.
The DoE is looking to purchase between 40 million and 60 million barrels of crude oil—about 20 million barrels of which would be sweet crude--to partially replenish the SPR, depending on market conditions, Roark said, determined by the amount of funds it raked in from selling off the 180 million barrels from the SPR last year.
The maximum amount of oil that can go into the SPR on a daily basis is about 685,000, so this will directly affect the amount and timing of the oil that is purchased. Maintenance at the underground storage facilities that house the SPR oil will also be a factor in the timing of its purchases.
The Biden Administration has already said it wants to complete the congressionally mandated SPR drawdowns before it begins to replenish—those drawdowns, which will total 26 million barrels, will be complete by June 30, 2023.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.