The US government could release another tranche of crude from the Strategic Petroleum Reserve as an unusually tight near-term oil market makes the remaining barrels under its March emergency authorization increasingly attractive.
Energy Secretary Chris Wright said another round of SPR loans is a “very real possibility,” according to Argus Media, as immediate crude prices trade well above contracts for delivery later in the year. Argus reported that more than 130 million barrels of the 172 million barrels authorized in March have already been loaned, leaving roughly 38.5 million barrels still available.
“The market right now is saying, ‘Hey, maybe we need that oil.’ So quite possibly we will respond to that,” Wright told reporters Thursday, according to Argus.
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The potential release would come with the reserve already at its lowest level in more than four decades. US Energy Information Administration data show SPR holdings fell to 284.96 million barrels in the week ended September 11, down from about 413.3 million barrels in early April.
The drawdown stems from the 172 million-barrel emergency exchange authorized March 11, which formed the US contribution to a coordinated 400 million-barrel release by International Energy Agency members following disruptions linked to the Middle East conflict.
Unlike an outright sale, participating companies are required to return the crude later along with additional barrels as a premium. DOE said its first 45.2 million-barrel tranche was contracted in exchange for 55 million barrels to be returned.
The market incentive has strengthened as futures move deeper into backwardation, where near-term oil commands a premium over later delivery. Argus said front-month WTI was around $101 per barrel when Wright spoke, roughly 25% above crude for delivery six months later.
Oil remained above $100 Friday. WTI was reported at around $102.79 per barrel and Brent at $104.49, with Middle East supply disruptions continuing to support near-term prices.
