The U.S. Department of Energy (DOE) has issued a solicitation to purchase 4.5 million barrels of crude oil for the Strategic Petroleum Reserve (SPR). However, the recent surge in crude prices may hinder this effort.
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The DOE has capped bids at US$79.99 per barrel, with submissions due by 11 a.m. CT on July 18. The proposal remains valid until August 2. The current price of West Texas Intermediate (WTI) crude settled at US$82.10 per barrel.
The required delivery period for the crude is from October to December at the SPR’s Bayou Choctaw site in Louisiana. A similar solicitation in June resulted in no contracts being awarded, likely due to WTI prices exceeding US$80 per barrel during that period.
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The SPR’s holdings have dropped nearly 42% since President Joe Biden took office in January 2021. This decrease follows sales authorized to combat high prices during the post-pandemic recovery and after sanctions were imposed on Russian energy exports post-invasion of Ukraine.
The SPR remains the world’s largest supply of emergency crude oil. The federally owned oil stocks are stored in underground salt caverns at four sites in Texas and Louisiana.
