(Bloomberg) – The Trump administration started the process of a mammoth drawdown of the U.S. emergency oil reserve, issuing a request to exchange 86 MMbbl of crude oil.
Map of Iran and the Strait of Hormuz, the strategic chokepoint for Middle East crude exports. Shipping disruptions in the corridor—normally responsible for about one-fifth of global oil flows—have helped push energy markets into turmoil. Map provided by Global Energy Infrastructure
Deliveries from the Strategic Petroleum Reserve, part of a massive 172 MMbbl release announced Wednesday, are expected to begin moving to market by the end of next week, the Energy Department said in a statement Friday.
The release, which is expected to take four months to complete, is part of a 400 MMbbl effort coordinated with other nations aimed at lowering crude, gasoline, diesel and jet fuel prices that have climbed dramatically since the U.S.-Israel invasion of Iran. The war has brought shipping traffic to a virtual standstill in the Strait of Hormuz, through which roughly a fifth of the world’s oil flows.
It has also placed political pressure on President Donald Trump to address rising fuel costs prior November’s midterm elections.
Under the terms of the exchange, companies will return the borrowed oil to Energy Department with additional barrels as a premium. Bids for the solicitation are due no later than 5 p.m. CT on March 17, the department said.
The Trump administration has arranged to replace the withdrawn oil with about 200 MMbbl within the next year, the Energy Department said earlier this week, adding it would be 20% more than what would be drawn down.
