In a statement, the US Department of Energy said, the United States has launched an auction for 32 million barrels of crude from four strategic petroleum reserves (SPR) sites which will be delivered between late-December and April 2022.
Washington’s sale of SPR oil, is aimed at lowering the value of U.S. sour crude stocks and benefit buyers in Asia who processes mainly high-sulphur oil.
The release of sour crude from US strategic reserves, in synch with India, South Korea, Japan, China and Britain, is aimed at lowering the prices of crude oil. OPEC+ producers have repeatedly ignored calls to boost production of crude.
In a post on its website, the DOE said, “About 10 million barrels will be made available from Big Hill and Bryan Mound in Texas, about 7 million barrels from West Hackberry in Louisiana and another 5 million barrels from Bayou Choctaw in Louisiana”.
Deliveries will take place between late December through April 2022, with early deliveries accepted in late December, said the DOE.
It went on to add, buyers will have to return the oil at later dates between 2022 and 2024.
Companies are required to submit bids on December 6 and contracts will be awarded no later than December 14.
“Spread across four months, this equivalent to a steady 270,000 b/d stream of medium sour grades, direct competition to Mars,” said a trader while adding that the quality of crude to be released will have API gravity of 31 to 33 degrees.
“Overall, very good news for Asian buyers of Mars – already depressed at some -$3.50 per barrels vs WTI, Mars should weaken even further.”
The DOE is scheduled to announce the sale for up to 18 million barrels of SPR crude after December 17.