The US Department of Energy (DOE) said 32 million barrels of crude oil would be sold from four Strategic Petroleum Reserve (SPR) sites as part of a coordinated effort with big oil importers to stabilise prices. Those barrels will be delivered between late December and April 2022, and the DOE noted. Despite the announcement, Brent crude futures held above $80 per barrel on Tuesday, as analysts said that the released volume was too small to make any significant changes.
According to DOE, the first auction will offer 10 million barrels of oil from Big Hill and Bryan Mound SPR facilities in Texas, 7 million barrels from West Hackberry in Louisiana, and 5 million barrels from Bayou Choctaw in Louisiana. Companies have until December 6 to submit bids, and contracts will be awarded before December 14. Selected buyers will have to return the crude between 2022 and 2024, the DOE added. The department will also announce the sale of a further 18 million barrels of SPR crude before December 17.
However, traders said that most of the SPR crude to be released would be blended sour or high-sulphur grades. This could weigh on prices of similar grades produced in the US, including Mars and Southern Green Canyon. Asian refineries, which process these types of crude oil, are expected to take advantage of the SPR sale.
