(Bloomberg) — President Joe Biden’s move to unleash supplies from U.S. petroleum reserves will flood the market with sour crude that refiners are currently shunning.
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Sour crudes are heavy in sulfur content, requiring additional refining that typically needs natural gas, which has doubled in price this year. If the crude is not used, it could end up being stored in oil tanks or exported away and may not have the intended effect of reducing gasoline prices. Already, a record volume of crude from the Strategic Petroleum Reserve was exported in October.
The Department of Energy is offering 32 million barrels of oil in an exchange that will need to be returned to the SPR during 2022, 2023, and 2024. It will also offer 18 million barrels of SPR crude oil after Dec. 17. Both tranches will be of sour crude, the DOE said in response to questions.
The supplies will also not be restricted for domestic use.
“The SPR does not have authority or control over exports of crude oil exchanged or sold from the SPR. There are no restrictions on the export of U.S. crude oil,” according to an email from the DOE. Foreign companies will also be permitted to participate in the two offers, “except countries that are not allowed to do business with the United States.”
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