US Could Buy Back Oil for Strategic Reserve Late This Year

OROCOVIS, Puerto Rico, March 28 (Reuters) – The U.S. could start buying back crude oil for the Strategic Petroleum Reserve late this year after President Joe Biden last year directed the largest ever sale from the stockpile, Energy Secretary Jennifer Granholm said.

The administration intended to repurchase crude oil for the SPR when prices were at or below about $67-$72 a barrel, after last year’s 180 million barrel sale drove the level of the stockpile to its lowest since 1983, the White House said in October. Biden conducted the sale to relieve oil prices that shot up after Russia invaded Ukraine.

U.S. oil prices this month touched that range but no sales were announced. Last week, Energy Secretary Jennifer Granholm told lawmakers in a House hearing it would be tough to take advantage of this year’s relatively low prices to fill the reserve back up, raising concerns about energy security.

But Granholm told Reuters during a visit to Puerto Rico that purchases could begin late in 2023.

“We will begin that process this year but to refill the full amount is impossible to do in one year,” Granholm said.

The department is conducting a 26 million barrel SPR sale mandated by Congress and two of the four SPR sites in Texas and Louisiana are down for maintenance, both of which have delayed buy-backs.

Granholm said the SPR sites undergoing life extension work at Bryan Mound in Texas and Bayou Choctaw in Louisiana would be “down into the fall.”

“We can start the process of buying back depending on some of these exchanges in the fourth quarter,” Granholm said, referring to returns of more than 25 million barrels of oil from previous exchanges with oil companies. She said any buy-backs would also depend on where the price was.

The SPR currently holds about 372 million barrels, the lowest since 1983, in hollowed-out salt caverns along the Gulf Coast.

Granholm was visiting Puerto Rico to seek ways to make the island’s power grid more robust.