The US Department of Energy (DoE) will begin repurchasing crude oil for the Strategic Petroleum Reserve (SPR) as the oil price falls below what it was sold for.
The US government released record amounts of crude from the reserve in the last 12 months to address post-Covid-19 demand increases and after Russia’s invasion of Ukraine led to a global energy crisis.
The DoE said oil had been sold at $96 per barrel and now, with oil prices dipping below $80 per barrel for both Brent and West Texas Intermediate, the government said it wants to secure a good deal for taxpayers.
By repurchasing an initial 3 million barrels of crude, US President Joe Biden is testing a new approach to replenishing the SPR that allows for fixed-price purchases of oil.
This plan intends to give producers the assurance that the price they receive when selling to the SPR will be locked in place, rather than being exposed to the volatile oil market.
The DoE will receive bids for this purchase until 10.00 US Central Time on Wednesday 28 December.
Contracts will be awarded by 13 January 2023 and deliveries to the Big Hill SPR site in Beaumont, Texas, will occur in February.