President Joe Biden’s administration hopes to buy 6 million barrels of crude oil for delivery to the Strategic Petroleum Reserve in December and January, as it continues its plan to replenish the emergency stockpile, the U.S. Department of Energy said on Thursday.
The department hopes to sign purchase contracts for the oil at $79 a barrel or less. That is an increase from its earlier preferred range of around $70 a barrel, but lower than the current benchmark futures price for U.S. oil of around $90 a barrel.
Last year the administration conducted the largest ever sale from the SPR of 180 million barrels, part of a strategy to stabilize soaring oil markets and combat high pump prices in the aftermath of Russia’s invasion of Ukraine.
Since then, the U.S. has bought back 4.8 million barrels for an average of less than $73 a barrel. In January, DOE rejected some bids from oil companies to replenish up to 3 million barrels.
The department will determine whether submitted bids are acceptable and believes its price guidance and monthly solicitations will allow it to move quickly when buying opportunities arise.
The DOE will issue monthly solicitations through at least May 2024, for volumes that have yet to be determined.
Last year’s 180 million barrel sale angered some Republicans who accused the administration of leaving the U.S. with the lowest level in the reserve in 40 years, and a thin supply buffer to adequately respond to a future supply crisis. But Republicans in recent years had also called for big sales from the reserve as domestic U.S. oil output has soared thanks to fracking and other drilling techniques.
The Biden administration has said it hopes its repurchase strategy will provide good taxpayer returns, because the oil was sold around $95 a barrel and can be bought back cheaper.
Fears that Israel’s military campaign in Gaza could escalate to a regional conflict have lifted world crude oil prices in recent days.