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US to buy 3 million barrels to refill emergency oil reserve

Published 05/15/2023, 04:38 PM
Updated 05/15/2023, 05:11 PM
© Reuters. FILE PHOTO: U.S. Energy Secretary Jennifer Granholm testifies at a congressional hearing on Capitol Hill in Washington, U.S., June 15, 2021. REUTERS/Evelyn Hockstein/File Photo
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(Reuters) - The U.S. Department of Energy said on Monday it will purchase 3 million barrels of crude oil for the Strategic Petroleum Reserve for delivery in August, and asked that offers be submitted by May 31.

U.S. Energy Secretary Jennifer Granholm had signaled to lawmakers late last week that her department could start repurchasing oil for the stockpile soon, after a record sale last year during a spike in prices that pushed the level of the reserve to the lowest since 1983.

The new purchase would be for sour crude oil delivered to the Big Hill SPR site in Texas sometime during the month of August, according to the announcement.

The Biden administration last year conducted the largest ever sale from the SPR of 180 million barrels, part of a strategy to stabilize soaring oil markets and combat high pump prices in the aftermath of Russia's invasion of Ukraine.

The sale angered Republicans who accused the administration of leaving the U.S. with too thin a supply buffer to adequately respond to a future supply crisis.

The sales brought the SPR inventory to around 372 million barrels, the lowest since 1983, amounting to just under 20 days of cover at current U.S. consumption rates.

The administration has said it would start to buy oil back into the reserve when prices are consistently at or below $67 to $72 per barrel, well-below the level at which the oil had been sold, so that taxpayers can get some benefit.

© Reuters. FILE PHOTO: U.S. Energy Secretary Jennifer Granholm testifies at a congressional hearing on Capitol Hill in Washington, U.S., June 15, 2021. REUTERS/Evelyn Hockstein/File Photo

U.S. crude prices were around $71 a barrel on Monday.

Granholm last month had signaled that repurchases would happen closer to the end of the year, after maintenance on two of the reserve's four sites on the coasts of Texas and Louisiana.

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