First sales of largest SPR drawdown in history

The DOE awarded contracts for the sale of 6.4 million barrels of crude from the Strategic Petroleum Reserve (SPR) yesterday, with additional future sales planned. Contracts were awarded to Shell Trading Company and Phillips 66 Company with deliveries scheduled for March and April.

DOE Announces Sales from Strategic Petroleum Reserve

Source: EIA

Multiple acts of congress in the past two years have called for sales from the SPR. Two separate sections (403 and 404) of the 2015 Bipartisan Budget Act have mandated yearly sales from the SPR through 2025. Sales made between 2017 and 2020 will generate up to $2 billion in revenue to fund the planned SPR Modernization Program, which will improve the SPR infrastructure to ensure long-term integrity. Additionally, sections of the 21st Century Cures Act and the Fixing America’s Surface Transportation Act have called for SPR sales with proceeds going to the general fund of the Treasury.

190 million barrels planned for sale

In total, approximately 190 million barrels are planned to be sold by 2025. This will be the eighth SPR sale program and the largest by a significant margin. The SPR currently holds 695 million barrels of crude, 97% of the total capacity of 713.5 million barrels.

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