More sales from Strategic Petroleum Reserve

On Monday, the Biden Administration announced it was selling 26 million barrels of crude oil from the Strategic Petroleum Reserve (SPR). The United States Department of Energy has considered cancelling the sell from the SPR for this year since the Biden Administration sold a record 180 million barrels last year. A cancellation at this juncture would have required Congress to act since this was a requirement under the Fixing America’s Surface Transportation (FAST) Act of 2015.

This most recent sell will temporarily push the reserve below its current level of 372 million barrels, which is the lowest level since 1983. By comparison, when Biden took office in January 2021, the SPR contained 638 million barrels out of a congressionally authorized maximum capacity of 713 million barrels. The delivery of 26 million barrels is anticipated to hit the market between April 1 and June 30 of this year. The Department of Energy said that it is implementing a three-part strategy to refill the reserve in the long term that will include repurchases from emergency sales, returns of more than 25 million barrels of oil from previous exchanges, and working with Congress to avoid unnecessary sales unrelated to supply disruptions to strategically maintain volume.

The United States benchmark for crude, West Texas Intermediate, fell 1% to trade near $79.00 when this announcement was made. This situation will be curious to track as many Americans will be gearing up for summer driving season during the release of these millions of barrels, which could remind drivers of paying over $4.00 per gallon for gasoline.

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