The US Department of Energy announced on Monday (Nov 13) that the United States intends to acquire 1.2 million barrels of oil to refill the Strategic Petroleum Reserve (SPR) following last year’s significant sell-off of reserves.
According to the Energy Department, the procurement plan involves purchasing 1.2 million barrels at an average price of US$77.57 per barrel from two selected companies. This restocking initiative comes after 18 bidders submitted bids for the purchase.
Last year, as part of President Joe Biden’s strategy to stabilize the oil market amid soaring prices triggered by Russia’s invasion of Ukraine, the administration sold a record 180 million barrels from the strategic reserves. The ongoing purchase initiative, if completed, will signify the repurchase of approximately 6 million barrels of oil by the United States.
The surge in oil prices was attributed to production cuts by Saudi Arabia and Russia, complicating the US government’s efforts to replenish its reserves. To address this challenge, a US government working group increased the bid price for oil to US$79 per barrel or less, a hike from the original bid range of approximately $68-72.
The Energy Department plans to continue issuing purchase requests for oil reserves monthly, extending the initiative at least until May 2023.
A spokesperson from the Department of Energy reiterated the commitment of President Joe Biden and the agency to replenish the Strategic Petroleum Reserve at reasonable prices. The goal is to ensure an adequate oil supply in case of emergencies while securing favorable deals for American taxpayers. This initiative highlights the administration’s strategic approach to stabilizing reserves amidst fluctuating oil markets.