US to loan companies up to 92.5 million barrels of Strategic Petroleum Reserve oil
SEATTLE (Oil Monster): President Donald Trump's administration said on Thursday it is seeking to loan energy companies up to 92.5 million barrels of crude from the Strategic Petroleum Reserve as part of a global agreement aimed at calming oil markets rattled by the U.S.-Israeli war on Iran.
The 92.5 million barrels are part of the 172 million barrels from the SPR that the U.S. agreed in March to loan as part of a pact with more than 30 countries in the International Energy Agency (IEA) to release about 400 million barrels to help relieve markets.
Fatih Birol, the head of the IEA, has said the war has led to the biggest energy crisis in history.
The U.S. had already offered 126 million barrels of crude in three batches, but oil companies only borrowed less than 80 million of those barrels or about 63% of what was offered.
The new offer, if all of it is taken by oil companies, would fulfill the U.S. goal to loan 172 million barrels. Bids are due on May 4.
Soaring fuel prices are a risk to Trump's fellow Republicans who are campaigning to hold thin majorities in the U.S. Congress in the November midterm elections. U.S. gasoline prices hit an average of $4.30 a gallon on Thursday, the highest since July 2002, according to AAA motor club data.
Global oil prices briefly hit a four-year high of more than $126 a barrel on Thursday, on concerns the war could lead to a protracted Middle East supply disruption.
Oil from the SPR is being released in loans that companies will return with an up to 24% premium of extra barrels, a system the Department of Energy says will help stabilize markets "at no cost to American taxpayers."
The SPR, held in caverns at four sites on the coasts of Texas and Louisiana, currently holds nearly 398 million barrels, about what the world uses in four days.
Delivery of the crude runs from June through August. Deadlines for oil companies to return it span from early next year till mid-2029.
Courtesy: www.reuters.com