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US Withdraws Bid to Purchase 6 Million Barrels of Oil for Emergency Reserve

A representative for the Energy Department stated on Tuesday that the Biden administration has withdrawn its offer to purchase 6 million barrels of oil for the Strategic Petroleum Reserve since it is anticipated that oil prices would continue to rise as a result of Saudi Arabia’s output reduction.

On July 7, the US issued its most recent request for bids to purchase sour crude oil for the SPR. The Energy Department has recently purchased 6.3 million barrels from the government after the administration released a record 180 million barrels from the reserve last year to stabilize prices following Russia’s invasion of Ukraine.

The decision was made based on “market conditions,” the official claimed, not on oil firms’ promises to sell oil to the SPR. The individual did not clarify what they meant, but limited oil supplies have recently led to an increase in world oil prices above $80 per barrel.

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Anticipated Oil Price Rise

us-withdraws-bid-purchase-6 million-barrels-oil-emergency-reserve
A representative for the Energy Department stated on Tuesday that the Biden administration has withdrawn its offer to purchase 6 million barrels of oil for the Strategic Petroleum Reserve since it is anticipated that oil prices would continue to rise as a result of Saudi Arabia’s output reduction.

Since Saudi Arabia stated it would reduce output by 1 million barrels per day beginning in July, in addition to existing cuts from eight OPEC+ members announced in April, oil prices are anticipated to rise even further in the upcoming months.

According to sources, U.S. crude stockpiles decreased by around 15.4 million barrels during the week ending July 28 as reported by the American Petroleum Institute on Tuesday.

When oil costs between $67 and $72 a barrel, the Biden administration has stated that it wants to repurchase it for the reserve.

According to the spokesperson, the Energy Department “remains committed to its replenishment strategy for the SPR,” which calls for direct purchases, the return of oil that was lent to businesses in the wake of hurricanes and other supply disruptions, and the cancellation of planned sales where drawdown is not required.

Despite the fact that domestic crude output is currently greater, the reserve’s stock of oil has dropped to its lowest point in about 40 years as a result of last year’s record sales.

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Source: Reuters

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