WASHINGTON (Agencies): Following significant withdrawals of 180 million barrels from the Strategic Petroleum Reserve (SPR) in response to rising gasoline prices, there is a growing discussion about the need to replenish the reserve.
President Biden’s order to release crude from the SPR resulted in a drop to its lowest levels in 40 years, emphasizing the importance of maintaining a strategic cushion. The Department of Energy (DoE) has initiated modest purchases to refill the SPR but is behind its target of repurchasing only 14 million barrels in 2023.
While the U.S. is the largest crude oil producer, it still imports approximately 6-6.7 million barrels daily, and the SPR serves as a crucial buffer against disruptions and price fluctuations. The IEA recommends maintaining around 90 days of consumption in strategic reserves, but the SPR currently stands at only 20 days post-withdrawals. The DoE’s attempts to refill the reserve face challenges, as even the announcement of solicitations impacts oil prices.
The DoE has bought less than 20 million barrels this year to refill the SPR, aiming to reach a target of 12 million barrels by the end of the year. While additional agreements to purchase 5 million barrels have been made, a substantial and sustained refill requires both steady buying and a halt in selling from the SPR, mandated by Congress. The debate over the necessity of the SPR continues, with arguments focusing on the changing dynamics of U.S. oil production and the ongoing importance of maintaining a supply buffer against potential disruptions.