The U.S. Department of Energy has announced the finalization of contracts to acquire three million barrels of oil, marking a strategic move to replenish the Strategic Petroleum Reserve (SPR). The purchase, with delivery planned for Big Spring, Texas, comes at an average cost of $77.31 per barrel, a notable reduction from the 2022 average of $95 per barrel.
President Joe Biden’s administration had previously conducted substantial oil sales, including a record-setting 180 million barrels, as a measure to regulate oil prices following Russia’s invasion of Ukraine, a major crude exporter. The latest acquisition contributes to the ongoing effort to restore the SPR, with approximately 14 million barrels procured post-last year’s sales. Additionally, by February, around 4 million barrels are anticipated to return to the SPR as oil companies fulfill the return of borrowed oil through a swap.
The recent transaction involved Sunoco Partners Marketing & Terminals LP selling 1.2 million barrels to the SPR, along with Macquarie Commodities Trading US LLC and Phillips 66 (PSX.N) each contributing around 900,000 barrels, according to information provided by the Energy Department. To expedite replenishment efforts, the Energy Department successfully negotiated the cancellation of 140 million barrels in congressionally mandated sales scheduled from late 2022 through late 2026. The cancellation has significantly contributed to progress in the SPR’s replenishment goals, as highlighted by the department.