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High Oil Prices Force the U.S. to Abandon Its Latest Attempt to Refill the SPR

The Department of Energy has canceled its latest tender for crude oil for the replenishment of the strategic petroleum reserve after oil prices moved higher than the DoE is comfortable with.

Last month, the DoE purchased 2.8 million barrels at a price of $81 per barrel, which was higher than its self-imposed ceiling of $79 per barrel. It appears the department is unwilling to keep paying more for SPR oil, saying it was “keeping the taxpayer’s interest at the forefront”, per Bloomberg.

“We will not award the current solicitations for the Bayou Choctaw SPR site and will solicit available capacity as market conditions allow,” the department said. “We will continue to monitor market dynamics.”

West Texas Intermediate topped $85 per barrel this week as Brent crude moved closer to $90 per barrel amid heightened geopolitical tensions in Russia and Ukraine and in the Middle East.

Despite the price volatility, the DoE said earlier this year it planned to refill the SPR by the end of the year. The bulk of the “refill” seems to be coming from canceled sales from the SPR rather than from buying additional volumes.

The U.S. saw the stockpiles of crude oil in the SPR fall from 638 million barrels at President Joe Biden’s inauguration to just 347 million barrels by the summer of 2023 as the administration tried to bring down gasoline prices for consumers by releasing over 180 million barrels from the SPR.

The large sell-off in the country’s safety supply of crude oil was met with criticism. Also met with criticism has been the administration’s slow response to falling oil prices. Now prices are trending higher again, placing a barrier in front of further purchases. The pause in new SPR buys could extend if expectations of a prolonged oil price rally materialize.

By Irina Slav for

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High Oil Prices Force the U.S. to Abandon Its Latest Attempt to Refill the SPR

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