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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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The U.S. Does Not Plan To Refill Its SPR With Sub-$80 Oil 

  • In March, the U.S. government authorized the release of 1 million bpd of oil from the SPR over a period of six months.
  • Earlier this week, there were rumors that the U.S. administration may start refilling the SPR when oil prices fall below $80.
  • The U.S. Department of Energy has quashed those rumors, asserting that there is no trigger price and the SPR won’t be refilled any time soon.

The U.S. Administration will not rush into buying crude to refill the Strategic Petroleum Reserve (SPR), and purchase plans don’t contain any oil price below which the Administration will start buying the crude, the U.S. Department of Energy says.

In March, the Biden Administration authorized the release of 1 million barrels per day (bpd) from the SPR over a period of six months in a bid to lower oil prices and potentially boost domestic production through contracts with companies to purchase future oil at fixed prices. The SPR releases are a response to the disruption of global oil markets caused by Russia’s invasion of Ukraine and subsequent Western sanctions that have led to soaring oil and gas prices. The final plan called for a total release of 180 million barrels of crude from the SPR to counter the inexorable increase in oil prices amid a tight market.

Earlier this week, Bloomberg News reported that the Administration could start filling the SPR when oil prices drop below $80 per barrel. The timing is being considered as the Biden Administration looks to have U.S. oil production continue growing and prevent a plunge in oil prices, sources with knowledge of the matter told Bloomberg.

After the report, Energy Department spokeswoman Charisma Troiano said in the statement, carried by Bloomberg:

“Claims that we are currently considering buying oil once it dips below $80 a barrel are inaccurate.”

“The Department of Energy proposed an approach months ago to replenish the Strategic Petroleum Reserve, and that approach does not include any such trigger proposal. As we said then, we anticipate that replenishment would not occur until well into the future, likely after fiscal year 2023,” the spokeswoman added.

Early on Thursday, the U.S. benchmark WTI Crude was trading at around $87 per barrel. The price dipped last week to $81 a barrel—the lowest level since January as concerns about oil demand in slowing economies took center stage on the market.  

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on September 15 2022 said:
    Then the United States will have to wait a long time before it replaces the 240 million barrels of crude oil it released from its Strategic Petroleum Reserve (SPR). This is due to the tightness in the global oil market, robust global oil demand and the ever-shrinking global spare oil production capacity including OPEC+.

    If the G7 leaders go ahead with the proposed cap on the price of Russian oil exports, Russia could halt all crude exports to countries trying to impose the cap thus sending crude prices to the stratosphere.

    While this isn't critical to US energy security in the short term, long term it would be a dangerous situation given the escalating tension between Russia and China on the one hand and the US and the EU on the other over Ukraine and Taiwan respectively.

    The current level of the SPR is 431.1 million barrels, the lowest since 1984. This equates to 21 days of oil at US consumption of 20.80 million barrels a day (mbd) in 2022 or 44 days of oil at 2022 import level of 9.8 mbd.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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