Drained Last Year, The US Had Difficulty Pile Up Oil Reserves Again

Drained Last Year, The US Had Difficulty Pile Up Oil Reserves Again

Jakarta, Reportase – The United States (US) is expected to take years to refill its oil reserves. This condition occurred after the US released a lot of its oil reserves in order to maintain prices on the international market last year.

This possibility was conveyed by the Secretary of Energy of the United States (US) Jennifer Granholm on Thursday (23/3/2023) to members of parliament.

Reported from Reuters, The United States (US) could take years to replenish strategic oil reserves, after President Joe Biden last year decided to release its oil reserves to their lowest level since 1983.

For the record, the US released its oil reserves of up to 15 million barrels in October 2022 in an effort to contain global oil prices. Oil prices soared last year after the Russian-Ukrainian war erupted.

“This year, it will be difficult for us to take advantage of the current low prices. But we will continue to seek those low prices in the future as we aim to save on paying taxes.” said Granholm, quoted from Reuters.

The US is now looking to replenish reserves, after last year’s historic sales of 180 million barrels.

The selling was heavy as crude oil prices consistently hovered around $70 a barrel fueling inflation. The oil from that sale sells for around $94 a barrel.

The price of benchmark West Texas Intermediate (WTI) crude oil futures has fallen to around $70 a barrel this week on worries about the economy amid the crisis at several banks.

With global oil prices already slumping, Granholm told the hearing the government wanted to buy back oil at under $72 a barrel or market price.

The US Department of Energy said last month that it was implementing a three-part strategy to replenish reserves over the long term.

Among these were buybacks for about $4.5 billion in revenue from previous sales, returns of more than 25 million barrels of oil from previous exchanges, and working with Congress to avoid “unnecessary sales unrelated to supply disruptions”.

Last year the Department of Energy managed to persuade Congress to cancel mandated sales of about 140 million barrels that had been set to last from fiscal year 2024 through fiscal year 2027.

The US Department of Energy moved ahead with sales of 26 million barrels the Strategic Petroleum Reserve (SPR) mandated by Congress in previous years to help fund the federal budget. Oil will be delivered from April 1 to June 20, 2023.

Granholm said that the sale and maintenance of two of the four reserves would make it difficult to buy back oil this year.

Bryan Mound in Texas and Bayou Choctaw in Louisiana are both undergoing “life extension” plans.

The SPR currently holds about 372 million barrels, the lowest since 1983, in hollow salt caves along the Gulf Coast. Steel pumps and other equipment are constantly exposed to moist, salty air.

[Gambas:Video CNBC]

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source: www.cnbcindonesia.com

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