U.S. government purchases oil for strategic reserves

In a strategic move to replenish its emergency oil reserves, the U.S. Department of Energy recently contracted five companies to supply 3.1 million barrels of crude oil to the Strategic Petroleum Reserve (SPR). This replenishment, scheduled for August, comes at an average cost of $73 per barrel. This initiative is a response to the depletion of the SPR following the unprecedented release of reserves in the aftermath of Russia's invasion of Ukraine last year.

The Department of Energy highlighted that this procurement was executed at a more favorable average price compared to the rate at which oil was sold from the SPR in 2022. This difference in pricing represents a beneficial deal for the American taxpayers. Previously, the administration had set a target price for purchasing oil for the reserve at or below $72 per barrel, aligning with its strategy of economic prudence.

Further emphasizing its commitment to rebuilding the SPR, the Department of Energy has also initiated a process to acquire an additional 3 million barrels for delivery in September. This move is indicative of a broader effort to reinforce national energy security.

It's noteworthy that the recent drawdown of the SPR had reduced its inventory to its lowest since 1983. The current reserves provide coverage for just under 20 days of U.S. oil consumption at prevailing rates. This context underscores the significance of the Department's actions in ensuring the SPR's readiness to respond to future energy crises and maintain a cushion against global oil market fluctuations.

Source: Reuters “US buys over 3 million barrels for oil stockpile, announces plan for 3 million more”