Middle East Conflict – Energy Market Risks and Commodity Impacts

US using swaps to enable SPR refill plan: Wright

US using swaps to enable SPR refill plan: Wright

Washington, 12 March (Argus) — President Donald Trump's administration will use "swaps" to more than offset the effects of a 172mn bl emergency drawdown of crude from the US Strategic Petroleum Reserve (SPR), US energy secretary Chris Wright said. The swaps arrangement, details of which have not been released, will allow the administration to add 200mn bl of crude back into the SPR within the next year at "no cost to taxpayers", Wright said. The proposal would take advantage of backwardation in the oil market to sell crude in the coming months at a high price, in exchange for the purchase of more crude in the future at a lower price. "As we release this oil to address the short-term needs, we're doing it in swaps," Wright said on Thursday in an interview on CNBC. "So we're going to release the 172mn bl and swap it for more than 200mn bl that will be back in the reserve within a year." Nymex WTI crude futures on Thursday afternoon were trading at $96/bl for delivery in April, compared with $71/bl for delivery in April 2027. Wright said because the front-month price is higher than the price in a year, a swap would allow the administration to refill the SPR with more crude than is being drawn down through the emergency sale. It remains unclear if the US Department of Energy (DOE) has already entered into swaps contracts, or if Wright was speaking in generic terms about market pricing. On Wednesday, Wright said the US had "arranged" to replace the 172mn bl with 200mn bl. DOE historically uses a competitive sales process for emergency drawdowns, under which crude being sold from the SPR is sold to the highest bidder in a public process. DOE did not respond to multiple requests for comment. It remains unclear what authority DOE could cite to enter into a swap. Under former president Joe Biden's administration, DOE used the proceeds from an emergency sale of 180mn bl of crude, sold at an average price of around $95/bl, to purchase nearly 60mn bl of crude and pay to cancel 140mn bl of congressional mandated crude sales. That arrangement did not use any swaps, but instead used competitive sales and purchases. Beyond refilling the SPR, an arrangement that locks in future prices would also create a price signal that results in oil companies taking steps to increase production, Employ America managing director of policy implementation Arnab Datta said. Having a price signal now would encourage near-term investments in additional output. "It takes six, nine, 12 months to get these shale operations running," said Datta, whose think tank supports using the SPR to moderate petroleum price shocks. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.