The United States is selling another 17 million barrels of crude oil from its strategic reserves. This decision was made one day after the International Energy Agency (IEA) announced it would accelerate emergency supplies to address the fuel supply crisis. The U.S. Department of Energy issued a request for proposals on Friday to exchange up to 17 million barrels of crude oil.
Details of the new oil release
This 17 million barrels is part of a total of 172 million barrels that Washington committed to releasing as part of the IEA's emergency action of 400 million barrels announced in March. Currently, the U.S. strategic oil reserves stand at approximately 283 million barrels. If companies withdraw all 17 million barrels before receiving any refunds, inventories will drop to about 266 million barrels, which is fully within the operational minimum reserve range of 250 to 300 million barrels.
Read more: The International Energy Agency releases 100 million barrels of oil from strategic reserves
Challenges facing the new release
However, there is a major challenge: companies must be willing to buy this oil. The Department of Energy offered the last tranche of its commitments in June, asking companies to repay borrowed oil with interest rates of 24%. However, companies accepted only about 500,000 barrels. The government is now trying again to offer this oil. API estimates show that U.S. crude oil inventories fell by 11.12 million barrels last week, following a decrease of 2.09 million barrels the week before. Commercial inventories have decreased by more than 51 million barrels over the past 26 weeks.
This new request comes after intensifying other campaigns related to emergency supplies. The IEA announced on Thursday that its members would quickly release 100 million barrels that remain from March, including over 20 million barrels of diesel. Now Washington is putting another 17 million barrels into the market, while strategic reserves have reached 283 million barrels, and the market has shown that borrowing government oil under costly repayment terms is not necessarily a deal that refiners are inclined to pursue this summer.
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