US seeks oil for Strategic Petroleum Reserve into May next year
Adds latest solicitation to by up to 6 million from February to May next year
By Timothy Gardner
WASHINGTON, Sept 18 (Reuters) -The U.S. is slowly replenishing the Strategic Petroleum Reserve, seeking to buyanother up to 6million barrels of oil for delivery through May nextyear, after the largest sale yet from the stockpile in 2022.
The Energy Department said on Wednesday it is seeking to buy the oil for delivery from February through May to thereserve's Bayou Choctaw, Louisiana site. Reutersexclusively reported the news a day earlier.
Here are facts about the SPR and efforts to put oil back in.
WHAT IS THE SPR?
It is the world's largest emergency oil stash. President Gerald Ford created the SPR in 1975 after the Arab oil embargo led gasoline prices to spike and damaged the economy.
Presidents since have tapped the stockpile to calm oil markets during war involving oil-producing countries or when hurricanes hit oil infrastructure along the U.S. Gulf of Mexico.
The oil is held in heavily guarded underground caverns at four sites on the Texas and Louisiana coasts.
HOW MUCH SPR OIL WAS SOLD IN 2022?
In 2022, the administration of President Joe Biden announced a sale of 180 million barrels of oil over six months, the largest SPR sale to date, in an attempt to lower gasoline prices after Russia invaded Ukraine.
The Department of Energy also conducted a sale of 38 million barrels in 2022 that had been mandated by Congress.
WHAT PRICE DOES THE US WANT TO BUY SPR OIL?
The administration says it sold the 180 million barrels at an average of about $95 a barrel. It wants to buy back oil at $79 to $79.99 or less.
Prices of the U.S. oil benchmark West Texas Intermediate fell to about $70.91 a barrel CLc1 on Wednesday as a rate cut from the Federal Reserve raised worries about the health of the U.S. economy.
Conflict in the Middle East and other factors could quickly boost oil prices, however In April, the U.S. canceled an SPR purchase of oil due to rising prices.
HOW MUCH IS COMING BACK?
The administration has so far bought back more than 50 million barrels of domestic oil since the historic 2022 sale at an average price of $76 a barrel, it says.
ClearView Energy Partners, a Washington based research group, estimates that the Energy Department has about $840 million left in its account to buy back SPR oil, or enough for about 10.5 million barrels at current prices.
In late 2022, the DOE worked with Congress to cancel the sale of 140 million barrels of SPR oil through 2027. Democratic and Republican lawmakers had voted for those sales to pay for government programs.
To keep filling the SPR after the money in the account is exhausted, the department would have to get Congress to allocate additional funds. It could also work to cancel future congressionally-mandated sales.
CURRENT SPR LEVEL
The reserve holds 380 million barrels, most of whichis sour crude, or oil that many U.S. refineries are engineered to process. The most it has held was nearly 727 million barrels in 2009.
The sales in 2022 reduced levels of the SPR to the lowest in about 40 years. That angered some Republicans who accused the Democratic administration of leaving the U.S. with a thin supply buffer to respond to a future crisis.
The administration says it has a three-pronged strategy to return oil to the reserve.
That includes buying back oil, the return of oil loaned from the SPR to companies, and canceling congressionally mandated sales of 140 million barrels of SPR oil through 2027. Both Democratic and Republican lawmakers had voted for those sales to pay for government programs.
The U.S., which is producing more oil than any other country ever has, is now a net exporter of crude oil and petroleum products. As members of the International Energy Agency, the West's energy watchdog, the U.S. and other countries are required to hold 90 days' worth of imports in reserve. So under that rule, the U.S. is not required at the moment to hold reserves.
Reporting by Timothy Gardner; editing by Jonathan Oatis and Barbara Lewis
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