Biden Releases Sour Crude That’s Out of Favor With U.S. Refiners

Rising processing costs have dented demand for sour crudes There are no export restrictions in latest SPR offer

ENB Publishers Note: The SPR release is a political stunt. The average price for oil in the reserves is an estimated $29 per barrel. Coupled with releasing the sour crude that the refiners don’t want in the current market. Pointed out by the King Operating Energy Research Team yesterday in the article “What effect does selling “Strategic Oil Reserves” have on oil prices in the short and long term?”

President Joe Biden’s move to unleash supplies from U.S. petroleum reserves will flood the market with sour crude that refiners are currently shunning.

Sour crudes are heavy in sulfur content, requiring additional refining that typically needs natural gas, which has doubled in price this year. If the crude is not used, it could end up being stored in oil tanks or exported away and may not have the intended effect of reducing gasoline prices. Already, a record volume of crude from the Strategic Petroleum Reserve was exported in October.

The Department of Energy is offering 32 million barrels of oil in an exchange that will need to be returned to the SPR during 2022, 2023, and 2024. It will also offer 18 million barrels of SPR crude oil after Dec. 17. Both tranches will be of sour crude, the DOE said in response to questions.

The supplies will also not be restricted for domestic use.

“The SPR does not have authority or control over exports of crude oil exchanged or sold from the SPR. There are no restrictions on the export of U.S. crude oil,” according to an email from the DOE. Foreign companies will also be permitted to participate in the two offers, “except countries that are not allowed to do business with the United States.”

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About Stu Turley 1548 Articles
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience in implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor in this space. Stuart has led the “Total Corporate Digital Integration” platform at Sandstone and works with Sandstone clients to help integrate all aspects of modern digital business. He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage and is the Co-Host of the energy news video and Podcast Energy News Beat. Stuart is on Board Member of ASN Productions, DI Communities and A Million Thanks Stuart is guided by over 30 years of business management experience, having successfully built and help sell multiple small and medium businesses while consulting for numerous Fortune 500 companies. He holds a B.A in Business Administration from Oklahoma State and an MBA from Oklahoma City University.