US seeks up to 3 million barrels of crude oil to fill up strategic reserves

The US on Monday said it is seeking up to 3 million barrels of crude oil to fill up its Strategic Petroleum Reserve (SPR), according to a Reuters report. 

The purchase will be made through May next year, and it will be for delivery at the Bryan Mound site in Texas.

The report said that the purchase will leave the government with little money to buy more till lawmakers approve more funds for the same. 

The latest development comes as the government wants to fill up its reserves after it had sold 180 million barrels of crude oil from the SPR in 2022 to limit the rise in local gasoline prices.

According to the US Energy Information Administration (EIA), the SPR has about 384.6 million barrels of crude oil as of October 18. 

Biden government authorised sale in 2022 after Russia invaded Ukraine

US President Joe Biden had authorised the massive sale of 180 million barrels of crude oil a couple of years ago after gasoline prices spiked, following Russia’s invasion of Ukraine. 

After Moscow’s invasion, Brent prices had risen to nearly $140 per barrel, hitting a more than 14-year high. 

As a result, domestic fuel prices spiked in the US. The sale of oil was authorised for private players in the country. 

The US government had since then bought back more than 55 million barrels of oil at an average price of $76 per barrel.

This is nearly $20 lower than the $95 per barrel price it sold the oil in 2022, Reuters said in the report. 

Not enough funds with US energy department

According to the Reuters’ report, in an effort to replenish the SPR,  the Department of Energy in the US had worked with lawmakers to cancel a sale of 140 million barrels of oil in late 2022. 

Democratic and Republican lawmakers had voted for those sales to pay for government programs, Reuters said. 

However, it is unclear how much more funds the department has to buy more oil for its reserves. A department spokesperson had told Reuters earlier that it has about $150 million left, which would be enough to purchase about 2 million barrels. 

Politicising the SPR

"Imminent depletion of the SPR petroleum account puts the onus on Capitol Hill for further replenishment, but politicization of the SPR could make it hard for lawmakers to agree," Kevin Book, a policy analyst at ClearView Energy Partners, a non-partisan research group, told Reuters. 

The upcoming US election brings more uncertainties on the subject.

The next government will have to work with Congress to fund the energy department’s SPR fund, which could be tricky. 

Additionally, working with lawmakers could also involve the cancellation of Congress’ deal of future sales of 100 million barrels of crude oil from the SPR between 2026 and 2031.