White House Begins Plan to Refill US Emergency Oil Reserves

3 million barrels of crude will be purchased by the Biden administration to replenish the country's emergency oil reserves.

The purchase of barrels for February delivery followed a historic 180 million barrel release of oil from the US Strategic petroleum reserve to tame high gasoline prices.

The Energy Department said in a notice Friday that the plan was to buy oil at a lower price than the average price it was sold for.

The US benchmark oil futures were trading around $75 a barrel.

When the price of crude hit $70 a barrel, the Biden administration laid out a plan to buy back oil from the reserve.

A senior administration official said Friday that the DOE is planning a 2 million barrel crude oil exchange to meet emergency supply needs. In an exchange, an entity borrows from the SPR for a brief period due to extreme circumstances and later replaces it in full, with a premium of an additional amount of oil, according to the agency.

The purchases are being made using a new rule that allows the Energy Department to use fixed price contracts. The DOE used to be able to enter into contracts for future delivery, but the price was reflected at the time of delivery.