The Department of Energy has canceled its offer for the purchase of 6 million barrels for the strategic petroleum reserve amid the latest surge in oil prices.
These hit the highest in three months earlier this week on strong demand projections, OPEC cuts and outages, and a massive 15.4-million-barrel decline in U.S. inventories for the week to July 28.
Last year, to arrest an inexorable climb in retail fuel prices, the White House announced a release of 180 million barrels of crude oil from the strategic petroleum reserve. Critics warned the move would have a limited effect on prices but compromise the energy security of the country by reducing the level of crude in the SPR.
The release, alongside other factors such as low demand and fears of demand destruction, did help to bring both fuel and oil prices down. In late 2022, the administration said it was going to start buying crude to replenish the SPR when prices fall to around $70 per barrel.
This year, the White House kept oscillating between caution and a willingness to finally start refilling the SPR, amid pressure from Congress Republicans to maintain an adequate strategic reserve of oil.
Eventually, this led to the offer for the purchase of 6 million barrels of oil, which was made in early July, when oil prices were within the desired range of $67 to $72 per barrel.
The offer, however, was for sour crude, which has seen substantially tightened supply due to Russia sanctions and Saudi production cuts, and this has led to an even more marked increase in prices.
Despite the pullback, the Department of Energy “remains committed to its replenishment strategy for the SPR,” a spokesperson said, as quoted by Reuters.
West Texas Intermediate was trading above $82 per barrel at the time of writing, up by more than $10 per barrel since early July when the Department of Energy made the SPR refill offer.