The U.S. Department of Energy (DOE) is offering 11 million barrels of oil for sale from the nation’s Strategic Petroleum Reserve (SPR) ahead of sanctions on Iran that are expected to reduce global supplies of crude.
The delivery period for the proposed sale of sour crudes will be from Oct. 1 through Nov. 30, according to Monday’s notice.
The U.S. government has introduced financial sanctions against Iran which, beginning in November, also target the petroleum sector of OPEC’s third-largest producer.
The sale appears to be designed to show the Trump administration is taking measures to restrain energy price increases ahead of the sanctions, one crude trader told Reuters.
U.S. crude was up by 45 cents at $66.36 a barrel in afternoon trading on Monday.
As a shale boom helped domestic oil production hit an all-time record this year, U.S. lawmakers increasingly have viewed oil-reserve sales as a way to reduce deficits and fund government operations.
U.S. President Donald Trump complained this year that oil prices are “artificially very high” and a potential release from the SPR, ahead of the U.S. midterm elections in November, was widely seen as a way to bring relief to motorists who have seen gasoline prices jump in the past year.
However, American drivers are unlikely to see prices at the pump fall by crude releases from the SPR because U.S. oil production already is sky high, analysts have said.
Still, prices could temporarily dip thanks to seasonal factors.
“The well-timed release may, optically help Trump achieve his goal of lowering domestic gasoline prices ahead of midterm elections given that the fall shoulder season is typically when retail prices fall and refiners head into turnarounds,” said Michael Tran, commodity strategist at RBC Capital Markets.
Earlier this year, the DOE sold about 5.2 million barrels of oil from the SPR to five companies including top refiners Valero Energy Corp and Phillips 66.
Offers for the latest sale are due at 2:00 p.m. Central Time, Aug. 28, the notice said.
SPR crude oil samples are not available prior to deliveries, the DOE said.
Three firms that bought crude oil last year from U.S. emergency stockpiles raised concerns about dangerous levels of a poisonous chemical in the cargoes, Reuters reported in March.
All three firms bought cargoes of SPR oil stored in an underground salt cavern in Bryan Mound, Texas last year.
The latest offer for sale includes sour crude from Bryan Mound, in addition to West Hackberry and Big Hill, the notice said.
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