The US Government is to push ahead with the sale of 26 million barrels of crude oil from the country’s Strategic Petroleum Reserve, despite reports that it was considering cancelling the sale.
The SPR was established after the oil embargo of 1973–1974 to mitigate any further supply shocks. While its massive underground tanks in Texas and Louisiana can hold about 714 million barrels of crude oil, it is currently at its lowest level since 1983. It now holds about 372 million barrels following the sale of 180 million barrels from the reserves last year, which was somewhat controversial because the aim was to bring down oil prices rather than react to a supply emergency. Nevertheless, Congress had already mandated the current release in previous years, so Congress would need to act again to cancel the sale.
The administration in Washington has previously indicated that it wants to refill the SPR at about $70 barrel to ensure value for taxpayers and support US producers like ExxonMobil, the maker of Mobil DTE hydraulic oil, when prices begin to decline. While prices have relaxed from the highs seen after Russia’s invasion of Ukraine, they have remained around the $80 per barrel mark, leading the US Department of Energy (DoE) to reject the first bids to sell oil to the SPR.
According to the DoE, only 3.1 million barrels of crude oil is expected to be returned to the SPR this fiscal year, followed by 22 million barrels next year.