Biden Administration Plans Oil Purchase for Strategic Petroleum Reserve

By Timothy Gardner

WASHINGTON (Reuters) – The Biden administration will seek up to 6 million barrels of oil for the Strategic Petroleum Reserve (SPR), according to a source familiar with the issue on Tuesday. This purchase, if completed, would match its largest effort yet in replenishing the reserve following a historic sale in 2022.

The administration is expected to announce the solicitation as soon as Wednesday for oil delivery to the Bayou Choctaw site in Louisiana, one of four heavily guarded SPR locations along the coasts of that state and Texas.

The U.S. will buy oil from energy companies for delivery in the first few months of 2025, the source added.

The Department of Energy has capitalized on relatively low crude prices, which are below the target price of $79.99 per barrel that it aims for in purchasing back oil following the 2022 SPR sale of 180 million barrels over six months.

On Tuesday, West Texas Intermediate oil was priced at $71.70 per barrel, increasing after Hurricane Francine halted crude output in the Gulf of Mexico last week. However, concerns about demand have kept prices relatively low in recent weeks.

President Joe Biden announced the 2022 sale, the largest ever from the reserve, in response to Russia’s invasion of Ukraine, which had pushed gasoline prices over $5 a gallon at record highs.

So far, the administration has repurchased more than 50 million barrels after selling 180 million barrels at an average price of about $95 a barrel, according to the Energy Department.

Although oil prices are currently below the target buyback price, tensions in the Middle East and other factors could rapidly raise prices. In April, the U.S. canceled an SPR oil purchase due to escalating prices.

The reserve currently holds 380 million barrels, predominantly sour crude, which many U.S. refineries are designed to process. The highest level the reserve has ever reached was nearly 727 million barrels in 2009.