US Pulls Back Offer to Buy 6 Million Barrels of Oil for Emergency Reserve

Reuters

12:12 JST, August 2, 2023

WASHINGTON (Reuters) – The Biden administration has pulled an offer to buy 6 million barrels of oil for the Strategic Petroleum Reserve, an Energy Department spokesperson said on Tuesday, as oil prices are expected to keep rising after a output cut from Saudi Arabia.

The U.S. made the latest solicitation to buy the sour crude oilfor the SPR on July 7. After the administration released a record 180 million barrels from the reserve last year to control prices after Russia’s invasion of Ukraine, the Energy Department has bought back 6.3 million barrels in recent months.

The move was not a rejection of oil companies’ offers to sell oil to the SPR but a decision made on “market conditions,” the spokesperson said. The person not specify what that meant, but tight oil supplies that have caused global oil prices to rise above $80 per barrel in recent weeks.

Oil prices are expected to rise further in coming months after Saudi Arabia said it would cut output by 1 million barrels per day starting in July, on top of other cuts from eight OPEC+ countries announced in April.

The American Petroleum Institute indicated on Tuesday that U.S. crude stocks fell about 15.4 million barrels in the week that ended July 28, sources said.

The Biden administration has said it wants to buy back oil for the reserve when it costs $67 to $72 per barrel.

The Energy Department “remains committed to its replenishment strategy for the SPR” which includes direct purchases, returns of oil that was loaned to companies in the wake of hurricanes and other supply disruptions, and cancellation of planned sales where drawdown is unnecessary, in coordination with Congress, the spokesperson said.

Last year’s record sales from the reserve have pushed its level of oil to the lowest in about 40 years, although domestic crude output is higher now.