The U.S. Energy Department announced on Monday that it has purchased 1.2 million barrels of oil in order to replenish the Strategic Petroleum Reserve (SPR). This comes after the largest ever sale of 180 million barrels from the reserve last year. The oil was bought from two companies at an average price of $77.57 per barrel, following the submission of 18 bids.
The sale of oil from the SPR last year was a part of President Joe Biden’s strategy to stabilize the oil market and combat high pump prices in the wake of Russia’s invasion of Ukraine. However, as oil prices have risen due to production cutbacks by Saudi Arabia and Russia, it has become challenging for the administration to buy back oil for the reserve.
In an effort to address this issue, the Energy Department raised the price at which it hopes to purchase oil for the reserve to $79 or less per barrel, up from the previous range of about $68 to $72. Last month, the department announced plans to buy 3 million barrels for December delivery and another 3 million for January at the higher price. It also stated that it will continue to issue monthly solicitations for oil purchases for the reserve until at least May 2024.
A spokesperson for the department emphasized President Biden’s commitment to refilling the SPR at fair prices, ensuring energy security, and securing a good deal for American taxpayers. The department has previously stated that the oil sold in last year’s emergency sales had an average price of $95 per barrel.
The replenishment of the SPR is crucial for the U.S. to maintain a strategic oil reserve and mitigate any potential disruptions in the global oil market.
