The Washington administration expects oil from the US Strategic Petroleum Reserve to be available on the market by the end of next week, the US Department of Energy announced.
On March 11, the Department announced that it would release 172 million barrels of oil from the reserve within 120 days. “The first batches are expected to start entering the market by the end of next week“, the Department of Energy said on March 13.
According to the document, the energy will be provided to companies through a swap procedure - a derivative contract in which two parties exchange cash flows or obligations for a fixed period.
This process involves companies borrowing oil from the reserve and later being obliged to return those volumes at a premium.
The department has begun collecting proposals from companies that plan to participate in these swaps. In the first phase, they will be provided with 86 million barrels of oil. The US Department of Energy previously said that the reserve will be replenished with “approximately 200 million barrels of oil“ next year.
The U.S. Strategic Petroleum Reserve was created by Congress in 1975 after the global energy crisis to serve as a backup option for future emergencies. Currently, four storage facilities in Louisiana and Texas store approximately 415 million barrels of oil. Total authorized storage capacity is currently set at 714 million barrels. The U.S. Strategic Petroleum Reserve is the largest government reserve in the world.