U.S. To Buy 77 Million Barrels Of Crude For Strategic Petroleum Reserve
By Irina Slav, OilPrice.com
Mar 16, 2020
The United States will start buying crude oil for the Strategic Petroleum Reserve within the next two weeks, with plans to buy around 77 million barrels, Bloomberg reported.
The move--which follows President Trump’s announcement last week that the government will buy “large amounts” of crude--aims to replenish the SPR by taking advantage of low oil prices while providing some much needed support for the local oil industry. The industry suffered a substantial blow by the latest oil price crash, especially in the shale patch.
According to Trump, the purchases would save “the American taxpayer billions.”
According to Bloomberg calculations based on the Friday closing price of West Texas Intermediate, if the government buys 77 million barrels of crude, it will pay $2.4 billion for it.
The Strategic Petroleum Reserve has a capacity to hold 713.5 million barrels of crude. Currently, it holds some 635 million. Three years ago, some legislators suggested it might be time to stop hoarding oil in the SPR given the fast increase in domestic oil production and falling exports. However, the dominant opinion remains that the SPR is necessary and the latest move by Washington has just revealed a secondary purpose to it: providing some relief for troubled shale producers...