The US could lend additional crude oil from its Strategic Petroleum Reserve as higher prices and tight near-term supplies increase demand for prompt barrels, Energy Secretary Chris Wright said, according to energy-market information provider Argus Media.
The recent rise in crude prices has made another round of loans a “very real possibility” under the continuing 172-million-barrel drawdown authorized by President Donald Trump in March, Wright told reporters Thursday.
“The market right now is saying, ‘Hey, maybe we need that oil.’ So quite possibly we will respond to that,” he said.
Front-month West Texas Intermediate crude was trading near $101 per barrel, about 25% above the price of crude for delivery six months later.
The structure, known as backwardation, occurs when near-term crude prices exceed those for later delivery and can make borrowing oil from the reserve commercially attractive.
The Energy Department has already lent more than 130 million barrels, or over three-quarters of the authorized drawdown. Another 3 million barrels are scheduled for release in the coming weeks, while about 38.5 million barrels remain unallocated.
“We had stopped selling because the prices were flat,” Wright said. “The market today is pulling for it. If that remains, then it’s very possible we will finish the allocation of oil we originally agreed to trade.”
Under the program, companies borrow government-owned crude and later return the oil with an additional premium. Previous agreements are expected to result in the return of roughly 1.25 barrels to the reserve for every barrel borrowed.
The continuing drawdown has reduced the Strategic Petroleum Reserve's crude inventories to around 285 million barrels, the lowest level since 1982.
Wright has said the return of borrowed crude is expected to begin early next year and continue through 2029.
