March 21, 2023

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US may sell oil from emergency reserves this week – sources

US may sell oil from emergency reserves this week - sources

WASHINGTON (Reuters) – The Biden administration plans to sell oil from the Strategic Petroleum Reserve in an effort to lower fuel prices ahead of next month’s congressional elections, three sources familiar with the matter said on Monday.

One source said President Joe Biden’s announcement is expected this week as part of the response to Russia’s war on Ukraine.

The sale will market the remaining 14 million barrels of Biden’s previously announced, and the largest ever, of the 180 million barrels of reserves that began in May.

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A fourth source said the administration also spoke with oil companies about selling an additional 26 million barrels from a sale mandated by Congress in fiscal year 2023, which began Oct. 1.

The Department of Energy will also release more details about the eventual buyback of oil, reflecting the White House’s desire to combat soaring pump prices while supporting local drilling workers.

Rising retail gasoline prices have helped push inflation to its highest levels in decades, posing a risk to Biden and his fellow Democrats ahead of the November 8 midterm elections, during which they seek control of Congress.

Biden said last week that gasoline prices are too high and that he will have more to say about cutting costs this week. David Turk, Deputy Secretary of Energy, also said last week that the administration could draw on the Strategic Petroleum Reserve in the coming weeks and months as necessary to stabilize oil.

The administration has spoken with energy companies about buying back oil through 2025 to replenish the Strategic Petroleum Reserve, the sources said, after Biden in March announced its largest-ever sale, 180 million barrels, in the May-October period.

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The Department of Energy still has about 14 million barrels of SPR oil for sale from the historic release, because sales slowed in July and August due to holidays and hot weather.

In addition, Congress authorized the administration by law years ago to sell another 26 million barrels of SPR oil in fiscal year 2023, which began on October 1, and the sale is likely to take place soon, one of the sources said.

“The administration has a small window before the midterms to try to lower fuel prices, or at least prove that it’s trying,” said a source familiar with the White House deliberations. “The White House doesn’t like $4 a gallon of gas and has indicated it will take action to prevent it again.”

U.S. gasoline prices averaged about $3.89 a gallon on Monday, up about 20 cents from last month and 56 cents from a year ago at this time, according to AAA Automotive Group. Gasoline prices hit a record average above $5.00 in June.

The Department of Energy and the White House did not immediately respond to requests for comment on the sales.

In May, the Energy Department said it would launch bids later this year to buy back about a third of the sale of 180 million barrels. She then indicated that the deliveries will be associated with lower oil prices and lower demand, most likely after the 2023 fiscal year, which ends on September 30 next year. Two sources said the buybacks could continue into 2025.

Biden officials in recent months have also urged oil refiners including ExxonMobil (XOM.N)Chevron (CVX.N) and valero (VLO.N) by not increasing fuel exports and warning them that he may take action if factories do not build up stocks.

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The administration has not rescinded a potential ban on gasoline and diesel exports, although opponents of such a move say it could worsen Europe’s energy crisis and raise fuel prices at home.

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(Report) Submitted by Garrett Renshaw, Timothy Gardner, Laura Sanicola and Andrea Shalal; Editing by Sam Holmes

Our criteria: Thomson Reuters Trust Principles.