US offers 11 million barrels of oil as Iran sanctions kick in

WASHINGTON: The US plans to release 11 million barrels of oil from its 660-million-barrel emergency stockpile, just as American sanctions on Iranian oil exports kick in.

The sour, high-sulfur crude will hit the market in October and November, according to a notice of sale from the Energy Department.

That timing may reflect the White House’s concern over a tight oil market amid the renewal of US sanctions on Iran, according to analysts at ClearView Energy Partners LLC. The Trump administration has asked allies to halt all imports of Iranian oil by Nov 4, stoking global supply fears.

Analysts have also speculated about whether President Donald Trump will announce an emergency release from the crude stockpile to lower US pump prices in the run-up to November’s mid-term elections.

Yet an 11-million-barrel sale over two months likely won’t do much to offset the impact of sanctions, which the administration estimates will remove 700,000 to 1 million barrels a day of Iranian crude from the global market by early November.

The October sale is part of a regular drawdown schedule to raise money for government programmes.

The Energy Department will draw crude from three sites that are part of the Strategic Petroleum Reserve: Bryan Mound and Big Hill in Texas, and West Hackberry in Louisiana.

Any further action by the president, who can release up to 30 million barrels in an emergency, is unlikely before the Nov 4 deadline, ClearView said.

Trump has proposed the sale of half of the stockpile – which currently totals 660 million barrels – to cut the budget deficit. Congress has so far authorised the sale of around 240 million barrels between 2017 and 2027.

Bids must be submitted no later than 2pm Central Time on Aug 28, with contracts awarded within seven business days. Deliveries will take place in October and November, according to the notice. — Bloomberg