n Friday, the Department of energy announced it intends to purchase 3 million barrels of oil to replace prior withdrawals from the Strategic Petroleum Reserve (SPR).
The White House noted the purchase, which will follow a bidding procedure which began in October, will replace oil sold at $96 per barrel with oil that will be purchased at a lower, fixed price.
In a statement, the Energy Department said, “Relative to conventional purchase contracts that expose producers to volatile crude prices, this new approach, when used at scale, can give producers the assurance to make investments today, knowing that the price they receive when they sell to the SPR will be locked in place. Today’s notice will pilot this new approach by starting with a purchase of up to 3 million barrels of crude oil.”
The Biden administration has released 180 million barrels of oil from the SPR since earlier in the year, when Russia invaded Ukraine, in an effort to try and contain skyrocketing crude prices. In May, the White House announced it would be soliciting bids to purchase back roughly a third of the amount of oil sold.
In the spring, Energy Secretary Jennifer Granholm has noted that any buybacks would be timed to exploit lower oil prices.
In May, she noted, “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.”
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