The Department of Energy said it has canceled its plans to purchase millions of barrels of oil to refill the depleted U.S. Strategic Petroleum Reserve, as oil prices rise to a five-month high.
In canceling the SPR purchase, the Energy Department said it was “keeping the taxpayer’s interest at the forefront” of its buyback plan, which is to refill the depleted reserves so long as prices remain below $79 per barrel.
Prices for global benchmark Brent crude and U.S.-based West Texas Intermediate soared well higher Tuesday, with Brent prices nearing $90 per barrel and WTI climbing slightly above $85 per barrel, amid worries about supply from Russia and producers in the Middle East.
“We will not award the current solicitations for the Bayou Choctaw SPR site and will solicit available capacity as market conditions allow,” DOE officials said, adding that they “will continue to monitor market dynamics” for future refills.
Energy Department officials first announced the Bayou Choctaw purchase last month, saying they would buy up to 3 million barrels of oil.
Like other SPR caverns along the U.S. Gulf Coast, its levels remain depleted to historic lows following President Joe Biden‘s 180 million-barrel drawdown of SPR oil in March 2022, aimed at stabilizing energy costs for consumers in the wake of Russia’s invasion of Ukraine.
It was the largest one-time drawdown in the history of the stockpile. And while the sales did help alleviate prices for consumers, they also sent levels plummeting to a 40-year low and prompted concerns that a lengthy depletion period could leave the U.S. vulnerable and resource-strapped in the event of an emergency.
Wednesday’s delay could also risk putting the administration off track as it looks to meet its promise of fully replenishing the SPR by the end of the year.
The Energy Department has struggled to refill the U.S. emergency stockpile under that time frame, or under the price points originally outlined. In October, it announced a buyback plan targeting oil prices of between $67 to $72 per barrel to replenish the SPR, which it later raised to $79.
In its most recent refill last month, the department exceeded those prices — spending an average of $81 per barrel to replenish the reserves.
The SPR currently stands at around 363 million barrels, according to data from the Energy Information Administration, down from the start of 2022, when levels stood at around 600 million barrels.
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DOE told the Washington Examiner it will “continue to solicit available capacity as market conditions allow” as it eyes up future purchases.
“As always, we monitor market dynamics to remain nimble and innovative in our successful replenishment approach to protect this critical national security asset,” the department added.