FOCUS: US Plans to Sell 5 Million Barrels of Crude in SPR Test
The Obama administration said it plans to sell 5 million barrels of crude oil from the US Strategic Petroleum Reserve (SPR) in a test of the distribution system (link). The sale of less than 1 percent of the total stockpile has been scheduled for some time and is not tied to turmoil in Ukraine or other geopolitical events, said William Gibbons, an Energy Department spokesman, a statement disputed by some observers outside of government – the announcement drew speculation that it might signal that the US is ready to use its energy might to strengthen its hand with Russia, which relies heavily on oil and gas revenues. Some analysts said that a threat of continued releases, which would lead to sustained price reductions, could force Russian President Vladimir Putin to the negotiating table. “Due to the recent dramatic increase in domestic crude oil production, significant changes in the system have occurred — including pipeline expansion, construction of new infrastructure, reversed flow of existing pipelines and increased use of domestic crude oil terminals,” necessitating the test, Gibbons said in a statement. The Energy Department also wants to conduct tests before the hurricane season begins June 1 and before refineries switch over to summer-grade gasoline.