Exclusive-US seeks 6 million barrels of oil for reserve amid low oil price

By Timothy Gardner

WASHINGTON (Reuters) – The Biden administration will seek up to 6 million barrels of oil for the Strategic Petroleum Reserve, a source familiar with the matter said on Tuesday, a purchase that, if completed, would equal the largest ever now in restock after a historic sale in 2022.

The administration will announce the request as soon as Wednesday to buy oil for delivery at the Bayou Choctaw site in Louisiana, the source said, one of four heavily guarded SPR sites along the coasts of that state and Texas.

The US will buy the oil from energy companies for delivery in the first months of 2025, the source said.

The Energy Department took advantage of relatively low crude oil prices, which are below the $79.99 a barrel price target at which it wants to buy back oil after the 2022 SPR sells 180 million barrels over six months.

West Texas Intermediate crude was at $71.70 a barrel on Tuesday, rising after Hurricane Francine halted crude output in the Gulf of Mexico last week, but demand concerns have kept prices relatively low in recent weeks.

President Joe Biden announced the 2022 sale, the largest in the reserve, after Russia, one of the world’s top three oil producers, invaded Ukraine. The invasion helped push gasoline prices to a record high of more than $5 a gallon.

So far, the administration has bought back more than 50 million barrels after selling the 180 million barrels at an average of about $95 a barrel, the Energy Department says.

While oil is now below its buyback price target, conflicts in the Middle East and other factors can quickly push oil prices higher. In April, the US canceled its purchase of SPR oil due to rising prices.

The reserve currently holds 380 million barrels, most of which is sour crude, or the oil that many US refineries are designed to process. The most it held was nearly 727 million barrels in 2009.

(Reporting by Timothy Gardner; Editing by Chizu Nomiyama)