US Energy Department Solicits Exchange of Up to 17 Million Barrels From Strategic Petroleum Reserve

The US Department of Energy issued a request for proposals on October 16 to exchange up to 17 million barrels of crude oil from the Strategic Petroleum Reserve, continuing the drawdown of a previously authorized 172-million-barrel release and exchange program.

Under the SPR exchange mechanism, companies that receive crude must return the oil at a later date with additional barrels as a premium. In a similar exchange solicitation conducted in May, the premium commanded was approximately 28%, though market observers expect that figure may be harder to achieve in the current environment, given softer conditions since the prior offer.

The DOE has said the broader exchange program is designed to ultimately return roughly 200 million barrels to the reserve, meaning today's 17-million-barrel solicitation represents one of the remaining tranches still to be placed from the earlier congressional authorization.