By Alex Kimani |OilPrice.com| The U.S. Department of Energy has finalized a contract to purchase 4.65 million barrels of crude oil for the Strategic Petroleum Reserve (SPR), the latest in a string of contracts aimed at refilling the SPR following a record release of 180 million barrels in 2022.
Exxon Mobil (NYSE:XOM) will supply 3.9 million barrels of the contract, with Macquarie Commodities Trading US LLC supplying the rest.
The DOE has since repurchased a total of 43.25 million barrels at an average price of around $77 a barrel, considerably lower than its sale price of $95 per barrel. Further, the DOE has worked with Congress to cancel a previously planned sale of 140 million barrels of oil from the reserve, also counting toward the refilling of the stockpile,
“As promised, we have secured the 180 million barrels back to the Strategic Petroleum Reserve released in response to Putin’s war in Ukraine–and we accomplished this while getting a good deal for taxpayers and maintaining the readiness of the world’s largest Strategic Petroleum Reserve,” Energy Secretary Jennifer Granholm has declared.
As of July 19, the SPR contained about 374.4 million barrels of crude, the highest level since the end of 2022. However, the current level is well below the typical 600-700 million the SPR held when the country used to rely more heavily on oil imports.
As the Biden Administration takes its time to refill the reserve, Deputy Energy Secretary David Turk said that the department only has around $1.2 billion left in the account it uses to purchase crude oil for the reserve. According to Bloomberg, the current balance would allow for the purchase of around 15 million more barrels of crude. Turk is quoted as saying that “We would like to, of course, do more than that,” Turk said. “But we do need additional funds to buy back even more and we’re in continuing contact with Congress to make sure that everyone is doing their part there.”
Previously, SPR reserves dropped to a 40-year low below 350 million barrels of crude, eliciting fresh concerns regarding the country’s energy security. Industry experts charged that the Biden administration has been dragging its feet on the matter.
“I don’t think they have any sense of urgency. Why in God’s name did the Department of Energy not sell at 100 and then buy at 70 when they had the opportunity to?” Ed Hirs, energy fellow at the University of Houston, told Yahoo Finance in an interview.
By Alex Kimani for Oilprice.com
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