On Friday, President Donald Trump announced that he has instructed the Secretary of Energy to begin buying tens of millions of barrels of oil for the Strategic Petroleum Reserve. "We're going to fill it right up to the top," he said in a White House speech that primarily focused on the response to the coronavirus.
The move is expected to provide some relief to U.S. oil producers like (( ExxonMobil NYSE:XOM) and ConocoPhillips NYSE:COP), which have been hurt by the fall in crude oil prices triggered by the Saudi Arabia-Russia oil price war.
According to Trump, the oil purchases will have numerous benefits, including "saving the American taxpayer billions and billions of dollars, helping our oil industry, and ... it puts us in a position that's very strong, and we're buying at the right price."
The Trump administration has been mulling over various steps to help the troubled oil industry in the wake of the oil price crash and projected declines in demand triggered by the coronavirus pandemic. On Tuesday, the administration suspended a previously announced sale of oil from the Reserve and met with oil industry lobbyists on Wednesday.
According to the Department of Energy, the Strategic Petroleum Reserve currently holds about 635 million barrels of oil. Energy Secretary Dan Brouillette announced on Twitter that the Reserve currently has an additional 77 million barrels of unused capacity. Trump apparently intends to purchase that entire amount in coming days and weeks.
The move seemed to have an immediate effect: Crude oil prices rebounded by 5% after the announcement. But it was still the worst week for oil prices since 2008.
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