The Biden administration plans to start refilling the heavily drawn-down US Strategic Petroleum Reserve and start with a purchase of 3 million barrels of crude oil in 2023.
The Department of Energy has a requirement to conduct a purchase of up to three (3) million barrels of United States produced sour crude oil the document said on Friday. The delivery period is February 1, 2023, to February 28, 2023.
As of last week, the Strategic Petroleum Reserve’s balance stood at 382.3 million barrels, the lowest level since 1984.
The Biden administration has drawn down some 200 million barrels from the strategic reserve over the past year to bridge a supply deficit in crude oil and reduce the exploded prices of fuel at the pump.
Usage of oil from the reserve accelerated following the administration’s approval of a 180-million-barrel draw in May after crude oil prices hit 14-year highs of almost $140 a barrel on the back of the Russia-Ukraine conflict.
As of Friday, the price of crude, determined by global benchmark Brent, hovered at under $80 per barrel. US crude oil itself traded at under $75 a barrel, after hitting $130 in March.
The pump price of gasoline, America’s premier automobile fuel, averaged around $3.18 per gallon, although it was below $3 in several regions of the United States.
The Biden administration was also planning to loan out about 2 million barrels from the reserve to energy companies to relieve a temporary shortage of supply caused by the shutdown of the Canada-to-US oil pipeline, Keystone, last week.
Under that arrangement, companies are simply to return later the crude they draw from the reserve to relieve any supply crunches.
This week’s rally in oil came amid the closure of the 622,000 barrel-per-day Keystone pipeline carrying Canadian heavy crude to the US Gulf Coast of Mexico.
Canada’s TC Energy Corp shut the 622,000 barrel-per-day Keystone pipeline on December 8 after finding a leak at the Kansas point of the line.
Subsequently, an oil spill of nearly 600,000 barrels into a Kansas creek was detected, constituting what officials say was the largest US oil spill in nearly a decade.
Sputnik / ABC Flash Point Oil & Gas Blog News 2022.