Biden Administration Slowly Puts Oil Back into The SPR Emergency Stash

• President Biden's administration is slowly putting oil back into the Strategic Petroleum Reserve (SPR) after selling a record amount from the emergency stockpile in 2022.
• In 2022, the administration announced a sale of 180Mn barrels over six months from the reserve, the largest ever SPR sale, in an effort to control fuel prices after Russia's invasion of Ukraine. The Energy Department also sold 38Mn barrels in 2022, which had been mandated in laws passed by Congress.
• The administration has repurchased 13.82Mn barrels of domestically produced, sour, or relatively high sulfur oil that many U.S. refineries are engineered to distill into fuels. It also has sped up the return of nearly 4Mn barrels to the SPR from loans to oil companies by several months.
• The oil is expected to be returned by February instead of mid-year. However, department officials have said the pace of the buybacks is being tempered by planned life extension maintenance at two of the four SPR sites. Further, analysts have said that Quick buybacks of much larger volumes could also risk pushing up oil and gasoline prices ahead of the presidential election in November.
• The U.S., which is producing oil at record volumes with more increases expected this year, also has more crude in the SPR than it is required to as a member of the Paris-based International Energy Agency, the West's energy watchdog. Under the agreement, the U.S. is required to hold 90 days' worth of net petroleum imports.
• The administration sold the 180Mn barrels at an average of about $95 a barrel and wants to buy back oil at $79 a barrel or less. The current West Texas Intermediate oil price of about $72 a barrel allows such purchases. However, prices could go back up given the risk of the war in Gaza expanding to the greater Middle East, or effects from the conflict in Ukraine.

(Sources: Reuters)