The government of President Joe Biden announced on Friday that it has stepped up its purchases of crude oil to restock the Strategic Petroleum Reserve in the wake of its historic 2022 stockpile auction.

Two bids were released by the Department of Energy on Friday to purchase a total of 6 million barrels of crude oil, which would be delivered from September to December at its Bayou Choctaw facility in Louisiana.

The department’s purchase pace would rise from around 3 million barrels per month to roughly 4.5 million barrels per month for September, October, and November if those offers plus the ones that were already publicised are accepted.

In a Tuesday exclusive interview, Energy Secretary Jennifer Granholm stated that the agency could expedite SPR replenishing this year.

Purchases of the SPR have been slowed down because two of the four locations on the Texas and Louisiana coastlines where it is kept are undergoing repair.

“All four sites will be back up by the end of the year, so one could imagine that pace would pick up, depending on the market,” Granholm stated.

After Russia invaded Ukraine in 2022, the Biden administration declared a record 180 million barrels had been sold from the SPR. The action was taken in an attempt to rein in petrol costs, which had skyrocketed to almost $5.00 per gallon. However, the SPR was also lowered to its lowest level in forty years.

Depending on the market, the agency stated that it will explore for other ways to restock the reserve.

For the reserve, the DOE plans to purchase oil for around $79 per barrel. Concerns over demand caused West Texas Intermediate oil futures to drop for a third consecutive week on Friday, trading significantly below that at about $75.

Selling more shares in the oil giant Aramco, Saudi Arabia is expected to collect around $11.2 billion, providing additional funding for the country’s expenditure plans, the firm announced on Friday.

According to Kevin Book, an analyst at ClearView Energy Partners, “the department is adding 50,000 barrels per day to SPR demand,” to 150,000 bpd for the reserve, or about the need of a medium-sized U.S. refinery. This is happening during a period of relative oil weakness.

This year, the DOE abandoned its index-based purchasing method and instead adopted a direct purchase approach for the reserve’s oil. It said that this, together with the completion of Bayou Choctaw’s maintenance, enabled it to purchase 38.6 million barrels of oil for an average price of $77 per barrel.

(Adapted from Reuters.com)

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