The United States is dipping into its Strategic Petroleum Reserve again, this time to keep crude flowing to a Louisiana refinery while oil prices climb above $117 per barrel. The reserve, meanwhile, is already at its lowest level since 1982.
The Department of Energy on Friday authorized an emergency exchange of up to 400,000 barrels to Phillips 66’s Lake Charles refinery, citing a temporary disruption to crude deliveries.
The oil will come from the reserve’s West Hackberry site in Louisiana and is available for immediate delivery.
Lake Charles can process about 264,000 barrels per day, meaning the authorized volume amounts to roughly a day and a half of the refinery’s processing capacity.
DOE did not specify what caused the delivery disruption. Phillips 66 confirmed it would receive the crude but declined to discuss refinery operations or commercial activity. A company spokesperson said it did not anticipate any operational impacts.
The government calls this an exchange, not a sale. Phillips 66 must return the borrowed barrels along with additional crude as a premium.
This isn’t Washington’s first trip into the SPR this month. On October 10, DOE authorized up to 4 million barrels in emergency exchanges for ExxonMobil and BP following weather-related supply disruptions.
The reserve has already been substantially depleted by withdrawals under President Donald Trump during the Iran war and former President Joe Biden following Russia’s invasion of Ukraine in 2022.
Current SPR levels are at 282.7 million barrels, according to the DOE—a level which is at what some analysts think is the operational minimum.
The latest exchange comes as oil prices continue climbing. Brent crude was trading at $117.04 per barrel Friday, up 3.42%, while West Texas Intermediate rose 4.07% to $103.52.
The 400,000-barrel authorization addresses a localized refinery supply disruption rather than the broader global oil shortage. But with Middle Eastern supply routes still constrained and crude prices above $100, keeping refineries supplied has become an increasingly expensive proposition.
By Julianne Geiger for Oilprice.com
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