NorthAmOil: US buys 3.1mn barrels for SPR, to seek 3mn more

Five companies have been awarded supply contracts for a total of 3.1mn barrels of oil for the Strategic Petroleum Reserve (SPR) stockpile.

The US Department of Energy (DoE) awarded the contracts to Atlantic Trading and Marketing for 1mn barrels; ExxonMobil for 900,000 barrels; Gunvor USA for 600,000 barrels; Macquarie Commodities Trading for 300,000 barrels; and Sunoco Partners Marketing & Terminals for 300,000 barrels.

The average price will be $73 a barrel, lower than the average of about $95 per barrel that SPR crude was sold for in 2022. This secured a “good deal” for taxpayers, said DOE.

The sour crude will be delivered to the Big Hill SPR site in August.

These contracts follow the Request for Proposal (RfP) that was announced on May 15. 2023.

Releases from the reserve were approved in 2022 partly in the wake of the energy market turmoil following Russia’s invasion of Ukraine. Gasoline prices had already risen before the invasion, in February.

The draw-downs, ordered by the administration of President Joe Biden, were also as the US neared mid-term elections in November, with the electorate highly sensitive to the issue of gasoline prices.

Analysis from the Department of the Treasury indicates that SPR releases last year, along with co-ordinated releases from international partners, reduced gasoline prices by up to roughly $0.40 per gallon compared to what they would have been absent these drawdowns, the DoE said.

Meanwhile, the DoE also issued a solicitation or another 3mn barrels of crude for the Big Hill site. During the remainder of the year the DoE is also expected to seek to buy another 6mn barrels of crude for the SPR, Bloomberg reported, citing sources.  

The SPR is the world’s largest supply of emergency crude oil, stored in underground salt caverns at four sites in Texas and Louisiana. The four-site SPR currently contains nearly 360mn barrels of crude, about half its usual capacity.