Oil companies ’may begin scheduling deliveries immediately,’ the Energy Department said.
The U.S. government will loan 53 million barrels of oil from the Strategic Petroleum Reserve (SPR) to petroleum companies in a bid to relieve elevated gas and oil prices amid the conflict with Iran.
In a news release on Monday, the Department of Energy (DOE) announced it would release the crude oil from its sites in Louisiana and Texas to contribute to the International Energy Agency’s (IEA’s) move to stabilize the price of oil, which has often risen above $100 per barrel since the conflict started on Feb. 28.
As of Tuesday morning, the price for a barrel of Brent crude oil rose slightly to $108.
“Deliveries will begin immediately as the Department continues to move swiftly to address short-term supply disruptions and strengthen U.S. energy security,” the agency said in a statement, adding that petroleum companies “may begin scheduling deliveries immediately.”
The DOE, according to the news release, will “evaluate market conditions and operational capacity as it advances additional steps to meet the full United States commitment under the coordinated international release.”
Participating petroleum companies can also use President Donald Trump’s usage of the Jones Act waiver, a federal statute that requires all goods transported by water between U.S. ports to be carried on American ships with American crews, to help “accelerate critical near-term oil flows into the market,” the DOE release said.
The DOE has already loaned around 80 million barrels from the reserve in recent weeks, bringing the total to 172 million barrels. The U.S. government had agreed to that larger amount in March in a pact with more than 30 countries in the IEA to release about 400 million barrels.
The decision is an attempt to mitigate the price increases caused by the effective closure of the Strait of Hormuz, a key waterway through which about one-fifth of the world’s oil passes on a normal day. Iran has launched strikes and threatened commercial vessels in the strait, while it has also said it would create a legal framework to oversee the transportation of ships in the area.
