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U.S. May Accelerate Refilling Strategic Petroleum Reserve

U.S. May Accelerate Refilling Strategic Petroleum Reserve

Jun 5, 2024

U.S. May Accelerate Refilling Strategic Petroleum Reserve

The Biden Administration is considering speeding up its efforts to replenish the Strategic Petroleum Reserve (SPR), U.S. Secretary of Energy Jennifer Granholm stated in an interview with Reuters. The move comes after a significant drawdown of the reserve.

Secretary Granholm indicated that all four SPR sites would be operational by year-end following a maintenance period. "All four sites will be back up by the end of the year, so one could imagine that pace would pick up, depending on the market," she explained.

At the time of President Joe Biden's inauguration, the SPR contained 638 million barrels of crude oil. By the summer of 2023, this figure had dropped to 347 million barrels. The Administration's response to low oil prices has also been criticized, with suggestions that this would have been an optimal time to replenish the reserve.

Despite earlier projections by the U.S. Department of Energy that only 40 million barrels would be refilled by the end of this year, the cancellation of congressionally mandated sales from 2022 will leave an additional 140 million barrels in the SPR, according to Reuters.

The Administration appears poised to increase the repurchase rate for the SPR, buoyed by the belief that the global oil market is sufficiently supplied and price spikes are not anticipated in the near future. "The Biden Administration could now accelerate the rate of repurchases of crude for the SPR as it views the global oil markets well-supplied and does not expect wild swings in prices or spikes in the 'next short while,'" Granholm informed Reuters.

Earlier in the year, Secretary Granholm expressed the Administration's goal to restore the SPR's crude levels to those before the massive 180 million barrels sales over the past two years. The Administration continues to target purchases at a price of $79 per barrel or below, with the WTI Crumble price hovering around $73 a barrel early on Wednesday.

The U.S. has already bought back about 38.6 million barrels and has canceled additional sales of 140 million barrels through 2027. The Administration has affirmed its intention to continue purchasing oil while prices remain under $80 a barrel.

Secretary Granholm also addressed other energy sector topics, including the impact of OPEC's decision to extend production cuts and the U.S.'s position in the global LNG market amid an export permitting pause.

In terms of reducing fossil fuel dependence, Granholm highlighted discussions with allies on creating a "strategic resilience reserve" for critical minerals like graphite and lithium, aiming to protect against reliance on countries such as China.

OilPrice Article

Reuters Article


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