US plans to buy back 60 million barrels for emergency oil supply

WASHINGTON (Reuters) – The United States will take bids this fall to buy back 60 million barrels of crude oil for the US Strategic Petroleum Reserve – the first step in replenishing the stockpile after a record-sized release this spring, the Department of Energy said.

The administration of US President Joe Biden had announced on March 31 a release of a record 180 million barrels from the stockpile to help tame runaway energy prices, soaring since the Russian invasion of Ukraine.

“As we are thoughtful and methodical in the decision to drawdown from our emergency reserve, we must be similarly strategic in replenishing the supply so that it stands ready to deliver on its mission to provide relief when needed most,” US Secretary of Energy Jennifer Granholm said in a press release detailing the plan.

The call for bids on the initial 60 million barrels “will take place in the fall of 2022 to secure delivery in future years when prices are anticipated to be significantly lower than they are today,” according to the press release.

A US source told Reuters that delivery of the first batch of the oil would likely start after the 2023 fiscal year, depending on market conditions.

CNN was first to report the plan to open bids this fall.

The Biden administration’s record-sized release from the SPR was part of a multipronged effort to combat inflation, soaring due to rising demand since the COVID19 pandemic and supply disruptions related to Russia’s war in Ukraine.

Inflation is considered to be a major threat to Biden’s Democratic party leading into the November midterm elections.

The administration’s critics have warned that the record release from the SPR puts taxpayers at risk of having to refill it at a higher price if the cost of crude oil doesn’t drop in future years.