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The U.S. Department of Energy has awarded contracts for the sale of 10.1 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) as part of a recent Congressionally-directed SPR crude oil sale.
The Department of Energy’s Office of Fossil Energy issued in early February 2021 a notice of sale from the SPR to fulfill the requirements of a mandatory sale of 10.1 million barrels during the fiscal year 2021. The proceeds of the sale will be deposited in the U.S. Treasury by the end of the fiscal year, DOE said last month.
Last week, DOE awarded contracts Glencore Ltd, Marathon Petroleum Supply and Trading LLC, Motiva Enterprises LLC, Phillips 66 Company, Shell Trading (US) Company, Valero Marketing and Supply Company, and the Government of Australia in the price-competitive sale. During the period for submitting bids, a total of 10 companies had responded to DOE’s notice of sale, filing 60 bids for evaluation.
Out of the total 10.1 million barrels of crude oil, 4.1 million barrels will be sold from the Bryan Mound site near Freeport, Texas; 3.3 million barrels from the West Hackberry site near Hackberry, Louisiana; and 2.7 million barrels from the Big Hill site near Winnie, Texas.
The SPR will schedule deliveries to take place in April and May this year, with early deliveries available in March 2021.
The U.S. Strategic Petroleum Reserve was set up in the 1970s when the Arab oil embargo created a fuel crisis in the United States. As of February 26, 2021, the SPR held 637.8 million barrels of crude oil.
Last year in March, when oil prices collapsed at the start of the pandemic and the Saudi-Russia break-up of the OPEC+ pact, the United States was said to be preparing to buy 77 million barrels of crude oil for the SPR to replenish the SPR with low-priced oil while providing some much-needed support for the local oil industry.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com