US Strategic Petroleum Reserve to start unloading crude barrels as soon as April

Houston — A federal effort to sell roughly 20 million barrels of crude oil from the US Strategic Petroleum Reserve could begin deliveries as early as April and continue well into 2021.

The reserve, which was sitting at 638.1 million barrels as of Jan. 8 according to the US Energy Information Administration, has slowly declined since peaking at more than 726 million barrels in early 2010. But that decline has coincided with gains in commercial storage over most of the last decade as the nation's shale oil boom took hold.

The sale of more than 10 million barrels of crude will be phased-in throughout 2021 -- as congressionally mandated -- with deliveries expected to begin in May, if not sooner, the US Department of Energy said, citing its confidence in the long-term health of global crude markets.

Another roughly 10 million barrels could be sold to raise up to $450 million to help fund the Strategic Petroleum Reserve's infrastructure modernization plans. But the timing of those additional sales -- either this year or in 2022 -- will be determined by the administration of President-elect Joe Biden, said Bart Barnhart, DOE deputy assistant secretary of petroleum reserves.

The SPR is the world's largest supply of emergency crude oil, and the federally owned oil stocks are stored in underground salt caverns at four storage sites in Texas and Louisiana.

The US is currently producing about 11 million b/d of crude oil, and the approximately 20 million barrels of reserve oil eventually up for sale represent 3% of the SPR.

"I don't believe that level of sales will impact security of supply. If the sales are spread out, then prices should be unaffected also," said Sandy Fielden, director of oil research at Morningstar.

The sale likely will focus on heavier crude oil grades that are currently more in demand in Asia, Fielden said, so the impact on domestic NYMEX WTI pricing should remain low.

Because the sale represents a small percentage of the SPR, Fielden said, it's unlikely Biden would have any opposition.