US prepares to slowly fill SPR as crude purchases extend through 2025

The United States will continue to buy crude oil when prices are at $70 or lower and plans to add several million barrels of crude oil to the Strategic Petroleum Reserve early next year.

The US Department of Energy (DOE) continues its efforts to bolster the depleted SPR with new oil purchases. DOE’s Office of Petroleum Reserves recently announced a solicitation to supply up to 1.5 million barrels of oil to the Bayou Choctaw site in January 2025. An additional solicitation will follow on August 12, 2024, for an additional 2 million barrels destined for Bryan. Site Mound, also for delivery in January 2025.

The move is part of a strategic plan to rebuild SPR while taking advantage of favorable oil prices.

The DOE’s stated goal is to buy crude oil at $79 a barrel or less.

The replenishment strategy follows the SPR’s critical role in stabilizing the market during global supply disruptions, notably the release of more than 180 million barrels of oil from the SPR starting in 2021 as gasoline prices remained high. The Treasury Department says these releases, along with coordinated international efforts, helped reduce gasoline prices by up to 40 cents per gallon by 2022.

The SPR currently hosts 375 million barrels of crude oil — a figure that is 263 million barrels less than the oil in the SPR at the start of President Joe Biden’s term. The SPR, capable of storing up to 714 million barrels of crude oil, is stored in underground salt caverns at four locations in Texas and Louisiana and was designed to protect the American economy and livelihoods during oil shortages.

In June, US Energy Secretary Jennifer Granholm told Reuters in an interview that the Administration could accelerate the pace of buying crude oil to replenish the SPR as all four sites will be available by the end of the year after a period of maintenance.

“All four sites will be back up again by the end of the year, so one would imagine the pace will pick up, depending on the market,” Secretary Granholm said, commenting on the current pace of buying about 3 million barrels of crude oil for reserve per month this year.

By Charles Kennedy for Oilprice.com

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