The United States intends to acquire 1.2 million barrels of oil in order to restore the Strategic Petroleum Reserve following the largest-ever sell-off last year, according to an announcement by the Energy Department on Monday. After receiving 18 bids, the department revealed that it plans to make the purchase from two companies at an average price of $77.57 per barrel. This initiative comes as part of President Joe Biden’s strategy to stabilize oil markets and address rising fuel prices in the wake of Russia’s invasion of Ukraine.
In the event that the purchase is finalized, it would mean the acquisition of approximately 6 million barrels. However, due to Saudi Arabia and Russia reducing production, the administration has encountered difficulties in replenishing the reserve. Last month, the pricing range for the buy-back was raised to $79 or below per barrel, up from the initial range of $68 to $72, as oil prices surged.
The Energy Department announced that it aims to procure 3 million barrels of oil for December delivery and an additional 3 million for January at the higher price. Moreover, it intends to issue monthly solicitations for oil purchases for the reserve until at least May 2024. A spokesperson for the department expressed President Biden’s unwavering commitment to refilling the Strategic Petroleum Reserve at fair prices to safeguard America’s energy security while ensuring a favorable deal for taxpayers.
The Energy Department clarified that the emergency sales of oil conducted last year yielded an average price of $95 per barrel. (This correction has been officially made by the Energy Department, stating that the US plans to purchase 1.2 million barrels of oil for the SPR in paragraph 1.)