US Government Completes $14 Billion Purchase to Replenish Strategic Petroleum Reserve

Strategic Oil Reserves Restored Following Emergency Release in 2022
The US Department of Energy (DOE) has finalized the purchase of 200 million barrels of crude oil to replenish the Strategic Petroleum Reserve (SPR), securing the oil at an average price of $74.75 per barrel. This marks the completion of a significant effort to restore the reserve, which had been depleted by 180 million barrels during an emergency release in 2022. The emergency release was triggered by disruptions in global energy markets following the Russian invasion of Ukraine.

The recent purchase, which forms part of a broader strategy, included contracts for 2.4 million barrels, valued at $178.65 million, awarded to Energy Transfer Crude Marketing (600,000 barrels) and Macquarie Commodities Trading US (1.8 million barrels). These deliveries are scheduled to be completed by May 2025, at the SPR’s Bryan Mound site in Texas.

A Three-Pronged Strategy for SPR Restoration
This strategic buyback effort follows the emergency sale in 2022, where the DOE sold crude oil to stabilize global markets and reduce fuel prices. The revenue generated from this sale, totaling $16.95 billion, was used to fund the repurchase of crude oil for the SPR. Of the total amount, $2.05 billion was redirected by Congress for deficit reduction.

The DOE’s buyback program has secured 59 million barrels at an average price below $76 per barrel, which is substantially lower than the $95 per barrel price during the emergency sale. In addition to these purchases, the DOE negotiated with Congress to retain 140 million barrels by cancelling scheduled sales between fiscal years 2024 and 2026, securing them at approximately $74 per barrel. This strategy has successfully restored nearly 200 million barrels to the SPR.

Strategic Importance and Impact on Energy Security
US Secretary of Energy Jennifer Granholm emphasized the milestone’s significance, stating: “With the awarding of these contracts, DOE has fully utilized all funding allocated for crude oil purchases following the sale of 180 million barrels in response to the Russian invasion of Ukraine, and secured 20 million more barrels at a good price for taxpayers.” She highlighted that this replenishment contributes to maintaining the SPR as the world’s largest supply of emergency crude oil, helping to stabilize energy markets and safeguard national energy security.

The SPR, with storage facilities across Texas and Louisiana, is an essential tool for the US to respond to potential supply disruptions. The replenishment of the reserve also reinforces the Biden-Harris Administration’s commitment to energy security and to putting American taxpayers first, ensuring that the US remains prepared for future emergencies while providing stability to the energy markets.

Replenishment Measures and Market Stability
The US Treasury noted that the 2022 SPR releases, in conjunction with international efforts, helped to lower US gasoline prices by as much as 40 cents per gallon. The DOE also accelerated the return of approximately five million barrels through exchange agreements, ensuring that future opportunities for replenishing the SPR are optimized.

The DOE’s approach to restoring the SPR is a balanced one, involving a combination of direct purchases, oil exchanges with added premiums, and legislative measures to prevent unnecessary sales. This three-pronged strategy has restored the SPR to a robust level, ready for any potential future disruptions in the global oil supply chain.