As nations’ bans on Russian oil imports pushes market prices higher, the use of emergency reserves becomes increasingly necessary.
The US Department of Energy’s (DOE) has announced that it has awarded contracts for all 30 million barrels of crude oil put on sale from the nation’s Strategic Petroleum Reserve (SPR), in a bid to rebalance the market following Russia’s ongoing invasion of Ukraine.
The move is part of a coordinated action with other International Energy Agency (IEA) member states to release a total of 60 million barrels of oil from emergency reserves, in order to fill market gaps left by the boycott of Russian supplies.
Sanctions against Russia have continued to roll in since its invasion of Ukraine at the end of February, and oil prices have been sent skyrocketing as a result of the new pressure on supply.
“This effort reflects a common focus and willingness to address significant market and supply disruptions related to President Putin’s war on Ukraine, as the administration continues to take action to help lower energy prices for Americans,” the DOE stated.
The department announced the notice of sale for the 30 million barrels on March 2. A total of 13 companies responded, submitted 109 bids for evaluation, with seven selected.
These successful firms include Chevron, Atlantic, Phillips 66, and Valero, receiving 1.27 million barrels, 1.05 million barrels, 4.2 million barrels, and 4.75 million barrels respectively.
The SPR reportedly plans to schedule deliveries of the oil between April 1 and May 31 this year, with early deliveries available in March if arrangements can be made.
The US has recently hit Russia with a new sanction, barring imports of Russian oil and oil products as a result of what President Biden termed the “Russian Federation’s unjustified, unprovoked, unyielding, and unconscionable war against Ukraine”.
This is not the first time the SPR has been tapped to try and rebalance an increasingly volatile oil market; in November 2021 the Biden administration announced the release of 50 million barrels from the reserves, released in coordination with other major oil-consuming nations including China, India, and Japan to bring down high oil prices.
For more information www.doe.gov
