US Energy Department stops crude purchases to refill strategic oil stockpile

The Department of Energy (DOE) halted purchases to replenish the Strategic Petroleum Reserve (SPR) in August and September, even though the emergency oil stockpile is still only about half full.

DOE said the decision to pause purchases is related to surging oil and gasoline prices.

“Keeping the taxpayer’s interest at the forefront, we will not award for the Bayou Choctaw SPR site in August and September and will continue to solicit available capacity as market conditions allow,” a DOE spokeswoman said in a statement. “As always, we monitor market dynamics to remain nimble and innovative in our successful replenishment approach to protect this critical national security asset.”

DOE was slated to purchase 3 million bbl for delivery to Bayou Choctaw in Louisiana—1.5 million bbl in August and another 1.5 million bbl in September—as part of a plan to replenish the stockpile by end-2024.

The Biden administration made the largest withdrawal in SPR history—180 million bbl—in spring 2022 to curb oil and gasoline prices following Russia’s invasion of Ukraine (OGJ Online, Mar. 31, 2022). That withdrawal came on the heels of a 50-million-bbl release from the SPR in November 2021 to stabilize gasoline prices (OGJ Online, November 23, 2021).

DOE has bought 32.3 million bbl at an average price of $76.98/bbl, less than the $95/bbl average the US received for SPR oil in the 2022 sale.

DOE also has accepted or scheduled about 4 million bbl in exchange returns, pushing SPR inventories up by 170 million bbl during the refill program.

Still, as of Mar. 22, 2024, the most recent data available, DOE’s four SPR sites held a total 360.8 million bbl, a little more than half of its authorized storage capacity of 714 million bbl and well below the 600 million bbls held in the reserve before Russia invaded Ukraine, according to the SPR website.

The purchase pause comes just days after DOE awarded contracts to Atlantic Trading & Marketing, Macquarie Commodities and Sunoco Partners Marketing & Terminals to deliver crude into the Big Hills, Tex., SPR site during September 2024.

DOE paid slightly over $80/barrel for that crude, the first time in the 2023-2024 refill program that the department purchased for more than its $79/bbl target price.

The DOE spokeswoman said the replenishment strategy is aimed at “maintaining the readiness of the world’s largest” strategic oil stockpile and doing so by “delivering a good deal for American taxpayers.”