The US Department of Energy is offering 11 million barrels of crude oil for sale from its strategic oil reserves, with delivery taking place in October and November.
The move appears to be an attempt to stabilise energy prices as the renewed sanctions on Iran start to take effect, which could result in over two million barrels per day (bpd) being taken off the market.
Domestic oil production in the US has hit record highs this thanks to oil producers like ExxonMobil, the maker of oils such as the high-performance synthetic gas engine oil Mobil Pegasus 1, investing in developing both shale oil production and offshore production in the federal waters of the Gulf of Mexico. Despite this, US production alone will unlikely be able to compensate for the lost production from Iran due to infrastructure constraints.
The sale from the strategic reserves may therefore provide some breathing space while the US and other countries with spare capacity, most notably Saudi Arabia and Russia, ramp up production.
The US Strategic Petroleum Reserve currently comprises 660.0 million barrels of crude oil, enough to supply the country for 36 days at 2013 consumption levels, even without domestic production and oil imports. It was established following the 1973 energy crises, but the size of the reserve has been questioned in recent years given the country’s resurgent oil production and the reduced reliance on oil imports. In 2014, the U.S. Government Accountability Office recommended reducing the size of the reserve in a report.