By Timothy Gardner
WASHINGTON (Reuters) – The Biden administration will seek up to 6 million barrels of oil for the Strategic Petroleum Reserve, a source familiar with the matter said on Tuesday, a purchase that if completed would rival the largest yet in replenishment of stock after a historic sale in 2022.
The government will announce on Wednesday its invitation to buy oil for delivery to Louisiana’s Bayou Choctaw site, the source said, one of four heavily guarded SPR sites along the coasts of that state and Texas.
The US will buy the oil from energy companies for delivery in the first few months of 2025, the source said.
The Energy Department has benefited from relatively low crude oil prices, which are below the $79.99 per barrel target price at which it plans to buy back oil after SPR sells 180 million barrels in six months in 2022.
West Texas Intermediate oil was trading at $71.70 a barrel on Tuesday, up after Hurricane Francine shut down crude production in the Gulf of Mexico last week, but concerns about demand have kept prices relatively low in recent weeks.
President Joe Biden announced the 2022 sale, the largest ever from the reserve, after Russia, one of the world’s three largest oil producers, invaded Ukraine. The invasion had helped push gasoline prices to a record of more than $5 a gallon.
The government has bought back more than 50 million barrels so far, after selling 180 million barrels for an average of about $95 a barrel, the Energy Department says.
Although oil prices are now below the target buyback price, conflict in the Middle East and other factors could cause oil prices to rise rapidly. In April, the US canceled an SPR purchase of oil due to rising prices.
The reserve currently holds 380 million barrels, most of which is sour crude, or oil that many U.S. refineries need to process. The country’s highest level was almost 727 million barrels in 2009.
