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The U.S. Plans To Buy 6 Million Barrels Of Oil For The SPR At $79

The U.S. Department of Energy wants to buy 6 million barrels of crude oil for the strategic petroleum reserve as part of efforts to refill it after a massive release last year of close to 200 million barrels.

The release was a partially successful attempt to bring retail fuel prices down following Russia’s invasion of Ukraine, which at the time some warned would empty the strategic petroleum reserve at a time when it was better full.

This year, the Department of Energy has repeatedly said it wanted to start refilling the SPR but the price never seemed right, after the department set itself a range of between $68 and $72 per barrel for the refill push.

Even when prices did decline to the lower $70s earlier this year, the Department of Energy bought only a few million barrels for the SPR, which remains at a 40-year low. The total amount bought so far is 4.8 million barrels, which cost the DoE an average of below $73 per barrel, according to Reuters.

Now, the DoE is saying that it was ready to buy oil for the reserve at a price of $79 per barrel or less. The timeframe for the potential purchases is December and January.

West Texas Intermediate is currently trading at $90 per barrel. Whether it could decline to $79 over the next two months is anyone’s guess but given that OPEC, and more specifically Saudi Arabia, remains determined to keep a lid on production, chances for that are slim, even with higher Venezuelan oil production now that Washington lifted the oil sanctions for six months.

News of the plan to refill the SPR has helped to push oil prices higher, reducing the chance of WTI falling to $79 anytime soon.

By Irina Slav for Oilprice.com

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  • independence01776 d on November 16 2023 said:
    Seems US is operating at a strategic level in regards to SPR. Interesting to say the least. They were selling SPR barrels near $100 in summer of 2022. Drove prices down some and now a year later, after the US has ramped up it's fracking, which has returned to record levels, they are buying on the market which is down in the $75 to $80 dollar range. Chinese have also been adding to their SPR. Seems once these additions are done, oil demand will be dropping some more. RIght now, with global economy slowing is a good time to be buying oil.
  • Robert Colombo on October 24 2023 said:
    What was the cost of the oil we released and I doubt you call it a successful program !
  • George Doolittle on October 20 2023 said:
    Well now we know the cash price of oil. Short $c Citigroup strong sell.
  • fredric longabard on October 20 2023 said:
    Buying at $79 per barrel when the current price is $90+ and the dollar is strong because of war risk. The delusion of bidenomics!
  • Mamdouh Salameh on October 20 2023 said:
    In the current tight global oil market it will be extremely difficult for the US Department of Energy (DoE) to find spare oil for sale to buy 6.0 million barrels to refill the US Strategic Petroleum Reserve (SPR).

    Even if the DoE did find oil for sale, the price will be far higher than the range of $68-$72 a barrel that it set for itself or even at $79.
    .
    On balance, I reckon that the SPR may never ever be refilled to its previous level.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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