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US aims to return emergency oil reserve to prior levels by year-end


US aims to return emergency oil reserve to prior levels by year-end By Reuters

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Published Mar 18, 2024 12:42PM ET
Updated Mar 18, 2024 04:40PM ET

© Reuters. FILE PHOTO: U.S. Secretary of Energy Jennifer Granholm delivers a speech ahead of a conversation with Daniel Yergin, the vice chairman of S&P Global, during the CERAWeek energy conference in Houston, Texas, U.S., March 8, 2023. REUTERS/Callaghan O’Hare/F

By Arathy Somasekhar

HOUSTON (Reuters) -U.S. crude oil stockpiles in the Strategic Petroleum Reserve (SPR) at year-end will be at or exceeding the level prior to a massive 180 million barrel sale two years ago, U.S. Energy Secretary Jennifer Granholm said on Monday.

The U.S. is replenishing the SPR, after President Joe Biden’s administration announced a sale of 180 million barrels of oil over six months from the reserve, the largest ever SPR sale, in an attempt to lower gasoline prices after Russia invaded Ukraine.

While the Department of Energy only expects to replenish by the end of this year about 40 million barrels since the 180 million sale, another 140 million barrels that would have been drained from 2024-2027 will stay in the SPR due to the cancellation in 2022 of congressionally mandated sales.

The department declined to provide a final number of stocks expected to be in the reserve at the end of the year.

The reserve currently holds about 362 million barrels. Stocks in the reserve stood at 565 million barrels before the announcement of the sale in March 2022.

Other congressionally mandated sales may also be canceled, Granholm said at the CERAWeek energy conference in Houston.

Having the SPR refilled is a congressional priority and “that’s a conversation we’ll be having with them,” Granholm said.

Completion of maintenance at one SPR storage site will allow the U.S. to buy more oil, Granholm said.

Energy officials are monitoring the rise in U.S. oil prices and its impact on replenishing the reserve, Granholm said. The Department of Energy had aimed to repurchase the oil under $79 a barrel. U.S. crude futures were trading above $82 on Monday.

She also said the Biden administration’s liquefied natural gas permitting pause “will be long behind us by this time next year.”

She did not say when the export authorizations could resume, but ruled out estimates of a 10- to 14-month delay, calling the pause temporary and for study purposes only.

“The LNG pause should not be impacting major decisions globally, because it is simply a temporary pause,” the secretary said, when asked about worries of higher coal buying in Asia.

The $60 a barrel price cap on Russian oil imposed by the U.S. and G7 allies was effective, Granholm said, adding the U.S. would continue to evaluate appropriate price levels as circumstances change.

The price cap imposed in December 2022 by the Group of Seven countries, the European Union and Australia bans the use of Western maritime services such as insurance, flagging and transportation when tankers carry Russian oil priced at or above $60.

US aims to return emergency oil reserve to prior levels by year-end

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