Biden to again release crude from SPR: Update

Adds details throughout

President Joe Biden is backing the sale of another 15mn bl of crude from the US Strategic Petroleum Reserve (SPR) in his latest push to bring down domestic gasoline prices.

The upcoming sale, which will offer crude for delivery in December, will bring to an end the unprecedented 180mn bl emergency drawdown that Biden authorized earlier this year as a "wartime bridge" in response to Russia's invasion of Ukraine. Biden will use a speech on 19 October to say he is prepared to hold more "significant SPR sales this winter if needed" because of actions disrupting global markets, the White House said.

The US is already required under existing law to sell an additional 26mn bl of crude from the SPR by 30 September 2023, but the administration is seeking flexibility to be able to defer that sale. Biden also has authority to approve additional emergency drawdowns of crude using the same authorities he used earlier this year to approve this summer's sales.

The White House says the continued withdrawal of crude from the SPR is helping ease gasoline prices that hit a record high of $5/USG for regular grade this summer in the wake of Russia's war in Ukraine. Biden will also use the upcoming speech to call on oil companies to reduce fuel prices for consumers, the White House said.

Critics dismiss the latest emergency withdrawal from the SPR as a ploy to sway voters before the midterm elections on 8 November. Biden's plan is "not only wrongheaded but a purely political maneuver designed to temporarily distract voters from the real issue - which is reduced energy production due to Biden's own policies," US senator Lisa Murkowski (R-Alaska) said in a post on Twitter.

Biden will also announce a plan to repurchase crude for the SPR in the future when the price of WTI crude is at or below $67-$72/bl, the White House said. Those crude purchases will replenish the SPR, potentially with more oil than was released, and will encourage US producers to make investments now in output, the White House said.

The US Energy Department, as part of that plan will finalize a rule allowing it to enter into fixed-price contracts for future delivery windows, with a plan to begin purchases for delivery in 2024 or 2025. Nymex WTI crude futures today settled at $71.71/bl for delivery in June 2024 and at $67.80/bl for delivery in June 2025.

The White House said Biden was fulfilling a promise to do "everything he can to lower prices" for consumers because the war in Ukraine is continuing to put pressure on global energy supplies. The Opec+ decision this month to cut production quotas is also threatening to raise prices, leading the administration to say it will reassess its relationship with Saudi Arabia

Another potential option to address energy prices would be to seek emergency restrictions on exports of petroleum products. US oil industry groups heavily oppose such restrictions. The White House has declined to take any options off the table, but administration officials have focused public remarks on the ability to release crude from the SPR.

The SPR, which consists of underground salt caverns at four facilities in Texas and Louisiana, held 405.1mn bl of sweet and sour crude as of 14 October, according to the Energy Department, the lowest level since 1984.

By Chris Knight