US to release another batch of crude from SPR

The US Department of Energy (DOE) is set to issue another request for proposals (RFP) to release up to 40 million barrels of crude oil from its Strategic Petroleum Reserves (SPR). This action is part of the DOE's efforts to replenish the 172 million barrel contribution to the International Energy Agency (IEA) coordinated 400 million barrel release by 32 member countries, aimed at stabilizing global oil supplies amidst the Middle East conflict.

The crude oil will be sourced from the SPR's Big Hill and Bryan Mound sites. This latest exchange builds on five previous emergency exchange RFPs totaling about 133 million barrels. The DOE anticipates this will both restore the SPR to above current levels and provide immediate supply to refiners and the global oil market. Bids for the solicitation are due before October 6.

Under DOE's exchange authority, participating companies will return the borrowed barrels with additional premium barrels. In May, the DOE released approximately 53.3 million barrels from its Bayou Choctaw, Bryan Mound, Big Hill, and West Hackberry sites to nine oil companies. The US SPR had dropped to 284.6 million barrels as of the week ending September 18, its lowest level since 1982, according to the US Energy Information Administration (EIA).

This represents a significant decline from 285 million barrels the previous week and from 406 million barrels a year earlier. The SPR fell below 300 million barrels in early August for the first time since 1983, and has continuously hit new lows every week since. A law prohibits the DOE from using its emergency drawdown power to take the SPR below 252.4 million barrels.

Once the SPR falls below 300 million barrels, it cannot pump oil out at emergency speeds, with its practical operating floor around 250 million barrels, according to Texas A&M University professor Siddharth Misra in Fortune.