US Commits To Buy 6Mln Barrels In Initial Restocking Of US Oil Reserve - Dept. Of Energy

WASHINGTON (UrduPoint News / Sputnik - 10th June, 2023) The US government has committed to buy approximately 6 million barrels of crude oil thus far to replenish its Strategic Petroleum Reserve (SPR), which has seen draws of about 200 million barrels over the past year and half, the Department of Energy (DoE) said Friday.

A DoE statement said the department was undertaking the� "purchase of 3 million barrels and new solicitation for purchase of 3 million additional barrels (that) advances efforts to replenish the reserve at a good deal for American taxpayers, maintain the SPR's operational readiness, and protect the nation's energy security."

Ten companies submitted 30 proposals in all to supply the first tranche of 3 million barrels, and five were successful, the DoE said.

"This purchase has been fully subscribed, and the contracts were awarded to five companies," the statement said. "These 3 million barrels are being purchased for an average price of about $73 per barrel, lower than the average of about $95 per barrel that SPR crude was sold for in 2022, securing a good deal for taxpayers."

The first tranche of oil, when ready for shipment, will be delivered to the Big Hill SPR storage site between August 1-31.

The DoE said bids to provide the other 3 million barrels must be received by June 20. "Contracts will be awarded to successful offerors by June 30, 2023.

This purchase is in continuation of the Biden-Harris Administration's three-part replenishment plan and DOE will pursue additional repurchase opportunities this year as market conditions allow," the statement said.

The Biden administration has leaned heavily on the SPR since late 2021 to offset tight crude supplies that had raised fuel costs for Americans. As of last week, the SPR's crude balance was at its lowest since November 1983 after the release of about 200 million barrels or more from the reserve over the past 18 months.

The DoE reiterated on Friday it has canceled 140 million barrels in congressionally mandated sales from the SPR scheduled for fiscal years 2024 through 2027.

The administration's use of the SPR has been a highly-charged matter for oil bulls and opponents of President Joe Biden. Both sides accuse him of indiscriminately releasing hundreds of millions of barrels from the stockpile to subdue crude prices and shore up his political standing with American voters � when the reserve is meant for emergency use, in times of critically short oil supply.

Biden, in his defense, said he was acting to reduce record high pump prices of fuel, which stood at above $5 per gallon last June and now hovers at around $3.50. The administration also blames last year's high crude prices for US inflation getting to four-decade highs of above 9% in June.