The U.S. is slowly replenishing the Strategic Petroleum Reserve, buying nearly 6 million barrels of oil for delivery in the first several months of next year, after the largest sale yet from the stockpile in 2022.
The Energy Department said on Monday it bought about 3.4 million barrels for delivery to the reserve’s Bryan Mound, Texas site from January to March next year. In August it bought nearly 2.5 million barrels for delivery in the same months at the same site, which was closed for maintenance but is now able to take oil.
Here are facts about the SPR and efforts to put oil back in.
WHAT IS THE SPR?
It is the world’s largest emergency oil stash. President Gerald Ford created the SPR in 1975 after the Arab oil embargo led gasoline prices to spike and damaged the economy.
Presidents since have tapped the stockpile to calm oil markets during war involving oil-producing countries or when hurricanes hit oil infrastructure along the U.S. Gulf of Mexico.
The oil is held in heavily guarded underground caverns at four sites on the Texas and Louisiana coasts.
HOW MUCH SPR OIL WAS SOLD IN 2022?
In 2022, the administration of President Joe Biden announced a sale of 180 million barrels of oil over six months, the largest SPR sale to date, in an attempt to lower gasoline prices after Russia invaded Ukraine.
The Department of Energy also conducted a sale of 38 million barrels in 2022 that had been mandated by Congress.
WHAT PRICE DOES THE US WANT TO BUY SPR OIL?
The administration says it sold the 180 million barrels at an average of about $95 a barrel. It wants to buy back oil at $79.99 or less.
Prices of the U.S. oil benchmark West Texas Intermediate fell to about $67.80 a barrel on Tuesday on a weaker demand outlook and global oversupply risks. Prices for WTI futures contracts in the first three months of next year were about $66 to $65.
Conflict in the Middle East could quickly boost oil prices, however. In April, the U.S. canceled an SPR purchase of oil due to rising prices.
HOW MUCH IS COMING BACK?
The administration has so far bought back more than 50 million barrels of domestic oil since the historic 2022 sale at an average price of $76 a barrel, it says.
Buybacks of much larger volumes could risk pushing up oil and gasoline prices ahead of the Nov. 5 presidential election, though that risk is lessening as prices fall.
CURRENT SPR LEVEL
The reserve holds 380 million barrels, most of which is sour crude, or oil that many U.S. refineries are engineered to process. The most it has held was nearly 727 million barrels in 2009.
The sales in 2022 reduced levels of the SPR to the lowest in about 40 years. That angered some Republicans who accused the Democratic administration of leaving the U.S. with a thin supply buffer to respond to a future crisis.
The administration says it has a three-pronged strategy to return oil to the reserve.
That includes buying back oil, the return of oil loaned from the SPR to companies, and canceling congressionally mandated sales of 140 million barrels of SPR oil through 2027. Both Democratic and Republican lawmakers had voted for those sales to pay for government programs.
The U.S., which is producing oil at record volumes, has more crude in the SPR than required as a member of the Paris-based International Energy Agency, the West’s energy watchdog.
The U.S. is required to hold 90 days’ worth of net petroleum imports, compared with the SPR’s about 155 days’ worth, according to Mason Hamilton of the American Petroleum Institute.
(Reporting by Timothy Gardner; editing by Jonathan Oatis and Barbara Lewis)