US could sell oil from emergency reserve this week - sources

US could sell oil from emergency reserve this week – sources

WASHINGTON, Oct 17 (Reuters) – The Biden administration plans to sell oil from the Strategic Petroleum Reserve in a bid to lower fuel prices ahead of next month’s legislative election, three sources familiar with the matter said on Monday.

President Joe Biden’s announcement is expected this week as part of Russia’s response to the war on Ukraine, one of the sources said.

The sale would market the remaining 14 million barrels of Biden’s previously announced release, and the largest ever, of the 180 million barrel reserve that began in May.

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The administration has also been talking with oil companies about selling an additional 26 million barrels from a congressionally mandated sale in fiscal year 2023, which began Oct. 1, a fourth source said.

The Department of Energy will also release further details on the potential oil buyback, reflecting the White House’s desire to fight rising pump prices while supporting domestic drillers.

Rising retail gasoline prices have helped push inflation to the highest in decades, posing a risk for Biden and his fellow Democrats ahead of the November 8 midterm elections, in which they seek to retain control of Congress.

Biden said last week that gas prices were too high and that he would have more to say about cutting costs this week. David Turk, its deputy energy secretary, also said last week that the administration could tap the Strategic Petroleum Reserve, or SPR, in the coming weeks and months if needed to stabilize oil.

The administration has been talking with energy companies about buying oil through 2025 to replenish the SPR, the sources said, after Biden in March announced the biggest sale ever, 180 million barrels, from May to October. .

The Energy Department still has about 14 million barrels of SPR oil for sale since the historic release, as selling was slowed in July and August by holidays and warm weather.

Additionally, the administration is mandated by an act of Congress years ago to sell an additional 26 million barrels of SPR oil in fiscal year 2023, which began Oct. 1, a sale likely to happen soon. , said one of the sources.

“The administration has a small window before the midterms to try to lower fuel prices, or at least demonstrate that it is trying,” said a source familiar with the White House deliberations. “The White House didn’t like $4 a gallon gasoline and they signaled they would take action to prevent that again.”

The average U.S. gasoline price hit about $3.89 a gallon on Monday, about 20 cents higher than a month ago and 56 cents higher than the same time last year, according to the AAA automotive group. Gasoline prices reached a record average above $5.00 in June.

The DOE and the White House did not immediately respond to requests for comment on the sales.

In May, the DOE announced that it would launch offers at the end of this year for a buyback of about a third of the sale of 180 million barrels. He then suggested that deliveries would be linked to lower oil prices and lower demand, likely after fiscal year 2023, which ends September 30 next year. Two sources said buybacks could continue until 2025.

In recent months, Biden officials have also urged oil refiners including Exxon Mobil (XOM.N), Chevron (CVX.N) and Valero (VLO.N) not to increase fuel exports and warned them that they could take action if the factories did not stockpile. .

The administration has not taken a possible ban on gasoline and diesel exports off the table, although opponents of such a move say it could exacerbate Europe’s energy crisis and raise fuel prices around the world. country.

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Reporting by Jarrett Renshaw, Timothy Gardner, Laura Sanicola and Andrea Shalal; Editing by Sam Holmes

Our standards: The Thomson Reuters Trust Principles.

Laura Sanicola

Thomson Reuters

Oil and energy reports, including refineries, markets and renewable fuels. Previously worked at Euromoney Institutional Investor and CNN.

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