Gasoline prices may be a thorn in U.S. President Biden's side, but a large sale of crude oil stashed in the Strategic Petroleum Reserve could change all that.
The United States will hold its largest sale this year of crude oil from its SPR, at 20 million barrels. This amount is twice what it sold a few months ago, according to a statement issued on Monday by the Office of Fossil Energy and Carbon Management.
The U.S. Department of Energy will take bids until August 31, with award contracts occurring by September 13.
The crude oil will be delivered between October 1 and December 15-well after driving season ends and refinery maintenance season begins.
The auction will include crude oil that is currently held at four SPR sites, which include Bryan Mount, Big Hill, West Hackberry, and Bayou Choctaw.
Earlier this year, the DOE sold 10.1 million barrels of crude oil from the SPR, as part of a Congressionally-directed SPR crude oil sale. For that sale, the barrels went to Marathon Petroleum Supply and Trading LLC, Motiva Enterprises LLC, Phillips 66 Company, Shell Trading Company, Valero Marketing and Supply Company, and the Government of Australia. There were 60 total bids for that sale.
As of August 20, there were 621.3 million barrels of crude oil in the SPR-this is 16 million fewer barrels than what was in the SPR in February, prior to the previous sale.
In June, Reuters reported that the United States could sell $6 billion worth of crude oil from the SPR to help fund the massive infrastructure deal. The White House confirmed that the SPR was one of the proposed financing sources.
Today's DOE notice did not mention an infrastructure deal.
The sale could pressure high crude oil and gasoline prices, which recently prompted President Biden to ask OPEC+ to turn on the taps and produce more crude oil to alleviate the burden on end-users.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group. More
Comments
This comes in the aftermath of the Biden administration calling on OPEC+ to raise its production which OPEC+ politely declined.
Moreover, oil prices are starting to respond as concerns about global demand started to ease particularly after China’s ‘zero COVID policy’ paid off. Therefore, the global oil market will ignore the sellof.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London