Stiff global competition for sour crude oil is threatening to complicate the Biden administration’s plan to buy up to 3 million barrels to refill the depleted US Strategic Petroleum Reserve.
Prices for sour crude — the kind the US government is trying to buy — have jumped amid expectations for the SPR purchases, buoyed by tighter supplies due to OPEC+ production cuts and the startup of new refineries. While the Biden administration is targeting $67 to $72 a barrel, traders said it may end up paying more than that.
The US plan to refill reserves has helped support oil prices that have been weighed down by expectations of a recession. But traders say the volume of crude is still too small to significantly tighten global markets — particularly since it will focus on buying the kind of high-sulfur sour grades that are in limited supply.