US lends oil companies 45.2 mln barrels from reserve, first batch of Iran war
The first batch covers 52% of the up to 86 million barrels of oil that the administration announced last week it plans to lend. Ultimately, the U.S. aims to lend 172 million barrels for delivery this year and next.
Also read: Trump considers ‘ending’ Iran war but rejects ceasefire
Companies receiving the first SPR loans include BP Products North America, Gunvor USA, Marathon Petroleum and Shell Trading, the Department of Energy said in a statement.
The loans are part of an agreement with 32 countries at the International Energy Agency to release 400 million barrels of oil from reserves. The war launched by the USA and Israel on February 28 pushed crude oil prices to their highest level since the beginning of Russia’s invasion of Ukraine.
Companies will return the oil along with extra barrels as a premium; The Department of Energy says this system is intended to stabilize markets “at no cost to American taxpayers.” The structure of the swap is unusual in that it requires companies to pay a premium of 18 percent to 22 percent on oil. Bidders may offer to pay back even more oil in the hope of winning the contracts.
Also read: Iran targeted US Diego Garcia base but did not hit it with missiles, WSJ reportsThe ministry said it will add approximately 10 million barrels to the SPR for the first batch at the end of the process.
Other companies that won tenders as of Friday are Energy Transfer Crude Marketing, Mercuria Energy America, Trafigura Trading and Vitol.
The SPR, held in underground caverns off the coasts of Texas and Louisiana, holds approximately 415 million barrels of crude oil; That’s more than the world uses in four days.
The US aims to eventually swap 172 million barrels from the SPR and expects oil companies to return about 200 million barrels, including premiums.
