(Bloomberg) — The Biden administration is well on its way to replenishing the nation’s emergency oil stockpile, starting with the purchase of 3 million barrels of crude.
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The purchase of the February delivery barrels follows a historic release of 180 million barrels of oil from the US Strategic Petroleum Reserve to tame high gasoline prices amid Russia’s invasion of Ukraine and other supply issues.
“This acquisition is an opportunity to secure a good deal for U.S. taxpayers by buying back oil for less than the $96 average price it sells for, as well as to increase security. energy,” the Department of Energy said in a statement Friday. announced plans.
Benchmark US oil futures pared losses on the news, trading around $75 a barrel on Friday afternoon.
The Biden administration had previously outlined plans to buy back some 700 million barrels of strong stock when crude prices hit around $70 a barrel.
In addition, the DOE is planning to exchange about 2 million barrels of crude oil to meet urgent supply needs due to TC Energy Corp’s Keystone pipeline. closed, a senior administration official said Friday. In an exchange, an entity – usually an oil refinery – borrows from the SPR for a short time due to extreme circumstances and then replaces it altogether, along with a premium of an additional amount of oil. supplement, according to the agency’s website.
The purchases are being made using a new rule adjustment that allows the Department of Energy to buy oil using fixed-price contracts. Previously, the DOE could contract for future delivery, but the price paid reflects the price at the time the product was delivered.
(Updated with more details on the purchase plan throughout and the chart.)
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