US seeks bids to swap up to 17 million barrels of reserve oil

The U.S. Department of Energy has asked companies to bid for an exchange of up to 17 million barrels of crude from the Strategic Petroleum Reserve, Reuters reported Friday, as Washington tries to rein in fuel prices driven higher by the war with Iran.

The U.S. Department of Energy issued a request for proposals on Friday for an exchange of up to 17 million barrels of crude oil from the Strategic Petroleum Reserve (SPR), Reuters reported, as the administration seeks to contain fuel prices that have climbed since the start of the war with Iran.

The release is part of a global agreement reached in March, under which International Energy Agency members committed to a coordinated drawdown of 400 million barrels from their emergency stocks, with the United States pledging 172 million barrels. In an exchange, companies borrow crude from the reserve and must later return the same volume plus additional premium barrels.

Reserve near multi-decade lows

The SPR ended August at 286.6 million barrels, more than 445 million barrels below its capacity, and is expected to fall to its lowest level since 1982 as releases continue. In late September the Energy Department offered another 40 million barrels through an exchange, with bids due Oct. 6. Federal law restricts non-emergency drawdowns that would take the reserve below 252.4 million barrels.

Map of U.S. Strategic Petroleum Reserve storage sites and pipeline links

Pressure at the pump

U.S. gasoline prices have stayed above $4 a gallon and diesel above $6, while distillate inventories were 14% below their five-year average in early September. West Texas Intermediate crude traded near $98.60 a barrel on Friday, up about 2.6%.

Earlier exchanges have drawn limited interest: in June companies agreed to borrow only about 500,000 barrels after being required to return premiums of up to 24%. Energy Secretary Chris Wright has urged European countries to fulfill their emergency stock commitments, saying several IEA members had released only a fraction of what they pledged.

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