The United States will sell an additional 20 million barrels of oil from its strategic reserve

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WASHINGTON — The Biden administration announced Tuesday that it will sell an additional 20 million barrels of oil from the Strategic Petroleum Reserve as part of a previous plan to operate the facility to calm oil prices boosted by the Russian invasion of Ukraine and as demand recovers from the pandemic.

The administration said in late March it would release a record 1 million barrels of oil a day for six months from the SPR, held in salt caverns dug on the coasts of Louisiana and Texas.

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The United States has already sold 125 million barrels of the reserve with nearly 70 million barrels already delivered to buyers, a senior administration official told reporters.

SPR releases have been a « lifeline » for oil and refining companies as the industry continues to bring oil production back online after declines during the height of the COVID-19 pandemic, the official said .

The US Energy Information Administration, the statistical arm of the Department of Energy, said this month that US oil production will increase to more than 11.9 million barrels per day (bpd) in 2022 and nearly 12 .8 million bpd in 2023, compared to around 11.2 million bpd. in 2021. This compares to a record close to 12.3 million bpd in 2019.

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The United States will launch offers in the fall to begin the process of buying back 60 million barrels of crude for reserves, a first step in rebuilding inventories after the release of 180 million barrels, the ministry said. Energy in May.

The department will soon propose a rule to help put oil back into the SPR, where levels have fallen to 475.5 million barrels, the lowest since June 1985, by allowing it to enter into futures contracts to buy oil in years to come at fixed and predefined prices.

« What this means in practice is that producers would have more certainty about future demand for their product, and it would encourage investment in production today, » a senior US official told reporters.

Oil purchases to replenish the SPR will not compete with near-term oil demand as they will likely take place after fiscal 2023, an official told reporters.

A U.S. Treasury Department analysis showed that SPR releases, along with coordinated releases from international partners, reduced gasoline prices at the pump by up to 40 cents per gallon, compared to what they would have been otherwise. International oil prices fell on Tuesday on the SPR selloff and on consumer worries about inflation and interest rates. Brent crude futures settled at $104.40 a barrel, down 75 cents.

(Reporting by Timothy Gardner, Doina Chiacu and Jeff Mason; Editing by Paul Simao, Andrea Ricci and Marguerita Choy)