The US Energy Department has announced on Monday that it plans to buy 1.2 million barrels of oil in order to replenish the Strategic Petroleum Reserve (SPR). This comes after the largest-ever sale of 180 million barrels from the reserve last year. The purchase will be made at an average price of $77.57 per barrel from two companies, following the submission of 18 bids.
The decision to replenish the SPR comes as part of President Joe Biden’s administration’s strategy to stabilize oil markets and combat high pump prices. The sale of 180 million barrels last year was a response to Russia’s invasion of Ukraine, which caused oil prices to soar.
However, the administration has faced challenges in buying back oil for the reserve due to rising oil prices on production cutbacks by Saudi Arabia and Russia. In an effort to secure oil at a reasonable price, the Energy Department raised the maximum price it is willing to pay back to $79 or less a barrel, up from an earlier price range of about $68 to $72.
The Energy Department plans to purchase 3 million barrels of oil for delivery in December and another 3 million barrels for delivery in January at a higher price. It also intends to issue additional solicitations for oil purchases on a monthly basis until at least May 2024.
“President Joe Biden and the Energy Department remain committed to refilling the SPR at fair prices, safeguarding this critical energy security asset while getting a good deal for American taxpayers,” a spokesperson for the Energy Department said.
The department has stated that the oil sold in last year’s emergency sales had an average price of $95 per barrel.