The USA Department of Energy (DOE) has initiated the bidding process for the supply of six million barrels of domestically produced oil to be deposited into the Strategic Petroleum Reserve (SPR).

In an invitation to suppliers issued on Friday, the DOE seeks to replenish the SPR following previous contracts awarded earlier in the week for the purchase of 3.2 million barrels of domestically produced crude. The total value of these contracts exceeded $230 million. These recent contracts fulfilled the DOE's previous invitation, which also resulted in contracts for three million barrels.

The current invitation for bidding will close on July 19, with deliveries scheduled for October and November. The oil received through these contracts, along with the previously awarded contracts since June, will be injected into the Big Hill SPR storage site located in Jefferson County, Texas.

In a press release, the DOE stated, "Today's announcement advances the President's replenishment strategy following his historic release from the SPR to address the significant global supply disruption caused by Putin's war on Ukraine." The Energy Policy and Conservation Act mandates that the government can tap into the SPR only during severe supply disruptions.

Energy Secretary Jennifer Granholm previously mentioned during an interview that, following the conflict-triggered withdrawals, the SPR needs to replenish more than 160 million barrels.

President Joe Biden announced in March 2022 the withdrawal of one million barrels per day from the SPR for the next six months, totaling 180 million barrels. According to the Treasury Department's analysis released on July 26, the SPR releases and coordinated releases with International Energy Agency member countries have led to a decrease in gasoline prices by 17-42 cents.

Based on data from the USA Energy Information Administration (EIA), the West Texas Intermediate (WTI) global petroleum benchmark gradually fell from consistently staying above $100 per barrel in March 2022 (a month after Russia invaded Ukraine) to July 2022. Last year, WTI prices peaked in June at a 12-year high of $114.84 and settled at $76.44 at the end of 2022.

The DOE stated that it will pursue additional repurchase opportunities as market conditions allow. Additionally, the department has focused on exchange returns and legislative solutions to avoid unnecessary sales unrelated to supply disruptions. It has successfully canceled 140 million barrels in congress-ordered sales for 2024-27.

As of the end of June, the SPR inventory stood at 347.159 million barrels, with a net withdrawal of 280,000 barrels per day in the second quarter, according to the EIA's short-term outlook published on June 6.

In the recent announcement, the DOE emphasized that "the SPR continues to be the world's largest supply of emergency crude oil."