The United States is offering another 17 million barrels of crude from the Strategic Petroleum Reserve (SPR), a day after the International Energy Agency (IEA) accelerated emergency stock releases as governments attempt to inject more oil and fuel into a tight market.
The Department of Energy issued a request for proposals on Friday for an exchange of up to 17 million barrels. This is part of the 172 million barrels that Washington committed to make available under the IEA's 400-million-barrel emergency action announced in March.
The SPR currently holds approximately 283 million barrels. If companies take the full 17 million barrels before any repayments are made, inventories would fall to roughly 266 million barrels, which is within the 250-million-to-300-million-barrel range generally considered the reserve's operational minimum.
However, there is a significant caveat: someone must be willing to take the oil. The DOE offered the final portion of its March commitment in June, requiring companies to return the borrowed crude later with premiums of up to 24%. Companies agreed to take only about 500,000 barrels.
The government is trying again. The American Petroleum Institute (API) estimated that U.S. crude stocks fell by 11.12 million barrels last week, following a 2.09-million-barrel decline the previous week. Commercial inventories have decreased by over 51 million barrels in the last 26 weeks.
Friday's solicitation follows another escalation in the emergency-stock campaign. The IEA announced on Thursday that member nations would accelerate the release of the roughly 100 million barrels still outstanding from March, including over 20 million barrels of diesel as soon as possible.
Washington is now offering an additional 17 million barrels, with the SPR at 283 million barrels. This comes at a time when the market has already shown this summer that borrowing government crude on expensive repayment terms is not necessarily a deal that refiners desire.
