The Trump administration declared on Friday that it had ordered 45.2 million barrels of crude oil from the Strategic Petroleum Reserve to oil companies in an attempt to control prices that have reached unprecedented levels in four years due to the war against Iran.
This initial batch covers 52% of the up to 86 million barrels that the administration announced last week it planned to lend. Ultimately, the United States intends to lend 172 million barrels that will be delivered throughout this year and the next.
The companies that received the initial SPR loans are BP Products North America, Gunvor USA, Marathon Petroleum, and Shell Trading, as stated by the Department of Energy.
These loans are part of an agreement with 32 member countries of the International Energy Agency to release 400 million barrels of oil from reserves. The war initiated by the United States and Israel on February 28 has pushed crude oil prices to their highest level since the beginning of the Russian invasion of Ukraine.
The companies will return the oil with additional barrels as a bonus, a system aimed at stabilizing markets “at no cost to American taxpayers,” according to the energy ministry. The exchange structure is unusual in that it requires companies to pay a premium of 18 to 22% in oil. Bidders could offer to repay even more oil in hopes of winning contracts.
The process will ultimately add nearly 10 million barrels to the SPR for the first batch, according to the ministry.
Other companies that have been awarded contracts since Friday are Energy Transfer Crude Marketing, Mercuria Energy America, Trafigura Trading, and Vitol.
The SPR, located in underground caverns on the coasts of Texas and Louisiana, contains around 415 million barrels of crude oil, more than what the world uses in four days.
The United States plans to exchange 172 million barrels from the SPR and expect oil companies to return approximately 200 million barrels, including the premium.
