The US Government said on Tuesday it is offering to loan energy companies up to 40 million barrels of oil from the Strategic Petroleum Reserve, the last US batch of crude from a global deal to unleash reserves in the wake of the war on Iran.
Washington agreed in March to loan 172 million barrels of oil from the SPR as part of a wider deal with about 30 countries in the International Energy Agency to release 400 million barrels from reserves around the world.
In June, the US offered to loan the last 40 million barrels from that agreement, but later that month revealed that companies only agreed to borrow about 500,000 barrels.
Energy Secretary Chris Wright said the US and Japan have delivered on their commitments under the agreement, but said “several European member countries have released only a fraction of the crude oil and petroleum products they pledged.”
Reuters reported on Wednesday that the White House has urged the European Union to draw down emergency diesel inventories in a bid to lower prices. The EU has not disclosed the total volumes its members have so far released,, although the IEA has said EU countries’ contributions will primarily take the form of refined products, rather than crude oil.
SPR LIMITS
The amount of oil in US SPR has sunk to less than 284 million barrels, the lowest level since 1982. President Donald Trump released large amounts following the start of the war with Iran and former President Joe Biden made big releases after Russia invaded Ukraine in 2022.
Trump has felt pressure to lower fuel prices ahead of the November midterm elections in which his Republican party is campaigning to maintain thin majorities in Congress. Gasoline pump prices are about $4.45 a gallon, up almost 50% since the war began in late February, and diesel prices have surged about 70% and have hit record levels around $6.50 a gallon.
The latest release could temporarily take the SPR level below a point where draw down restrictions come into force.
US law prohibits the president from ordering routine, small draw downs if the SPR falls below 252.4 million barrels. The president could still order releases for major emergencies.
The US is loaning oil from the SPR to companies that will repay in crude, with premiums of up to 24%. The department says that system will help stabilize markets with no cost to US taxpayers. But the return of the oil is not slated to be completed until late 2028.
The department said companies have until October 6 to submit proposals on borrowing the oil.
(Reporting by Timothy Gardner, additional reporting by Daphne Psaledakis and Doina Ciacu and Kate Abnett in Brussels; Editing by Susan Heavey and David Gregorio)