Biden Administration Plans to Purchase Oil for Strategic Petroleum Reserve

By Timothy Gardner

WASHINGTON (Reuters) – The Biden administration is set to acquire up to 6 million barrels of oil for the Strategic Petroleum Reserve (SPR), as reported by a familiar source on Tuesday. If finalized, this acquisition will equal the largest since the significant sale in 2022.

The announcement regarding the solicitation is expected as early as Wednesday, with plans to deliver oil to the Bayou Choctaw site in Louisiana, one of the four heavily guarded SPR locations situated along the coasts of Louisiana and Texas.

The U.S. aims to purchase this oil from energy companies for delivery in early 2025, according to the source. The Department of Energy has strategically leveraged relatively low crude prices, which currently sit below the target price of $79.99 per barrel, intended for reinstating oil lost during the 2022 SPR sale of 180 million barrels over six months.

As of Tuesday, West Texas Intermediate oil was priced at $71.70 per barrel, with a recent increase following Hurricane Francine’s impact on crude output in the Gulf of Mexico last week. Despite this, demand concerns have kept prices relatively subdued in recent weeks.

President Joe Biden initiated the 2022 sale, marking the largest withdrawal from the reserve following Russia’s invasion of Ukraine, which had previously escalated gasoline prices to over $5 a gallon.

Thus far, the administration has successfully repurchased over 50 million barrels since the sale of 180 million barrels at an average price of about $95 per barrel, as indicated by the Energy Department.

Although current oil prices are below the targeted buyback rate, fluctuations due to Middle Eastern conflicts could rapidly increase prices. Notably, the U.S. had previously canceled an SPR oil purchase in April due to rising prices.

Currently, the reserve holds 380 million barrels, predominantly sour crude, which is preferred by most U.S. refineries. The highest amount stored in the reserve was nearly 727 million barrels in 2009.