Chris Wright says DOE will refill Strategic Petroleum Reserve in next months as prices soar

The Trump administration plans to start refilling the nation’s emergency crude reserves in just a matter of months, after releasing more than 130 million barrels of oil and causing inventories to fall to the lowest levels in decades. “It’ll start being refilled in the next few months,” Energy Secretary Chris Wright said of the Strategic Petroleum Reserve on Monday on Bloomberg TV.The administration began drawing on the SPR in March as part of its broader strategy to limit the rise in oil and gasoline prices from the trade disruptions caused by the war in Iran. At the time, the administration said it would be releasing up to 172 million barrels of oil from the reserves. Under the terms of the deal, the barrels were not sold, but rather loaned. Buyers were legally obligated to return the original number of barrels as well as a premium of up to 24% in the form of additional oil.Those repayments are now soon to come due, Wright said.“Remember, the oil we released, none of it was sold,” he said. “It was all swapped with delivery dates and delivery amounts agreed in those contracts. So that oil will start going in. The oil problem is going to fade away.”The Department of Energy aims to replace the released reserves with around 200 million barrels, roughly 20% more than what was set to be released. If all of this is secured, it would leave the SPR with 443 million barrels, around 28 million barrels more than what was recorded in January, before the war began.Refilling the SPR by buying oil on the market would be difficult, as prices for oil have surged above $100 per barrel in recent days. Tensions in the Middle East escalated further over the weekend, as global oil supply has become more constrained due to attacks on the Saudi Arabian East-West Pipeline, and the Iran-backed Houthis seized a key island along the crucial Bab el Mandeb Strait. As a result, Brent crude soared to more than $109 a barrel as of 10:30 a.m. EDT on Monday, while West Texas Intermediate shot up to just over $104 a barrel. With crude above the $100 line, analysts are doubtful the administration would immediately commit to purchasing new barrels. Industry experts have previously warned that even when WTI fell to the low $60s and even high $50s last year, it wasn’t far enough to refill reserves rapidly. TRUMP SAYS HOUTHIS ‘DON’T WANT TO FIGHT US’ AFTER STRAIT OFFENSIVE AND SAUDI PIPELINE SHUTDOWN“We weren’t really anticipating there to be a refill unless we saw significant, kind of softness in prices at the beginning of the year, probably below $50 a barrel, but for an extended period of time that would need to occur,” Sean Vale, an energy market analyst with Rystad Energy, told the Washington Examiner in June.The administration’s refill of the SPR is also expected to be supported by increased production of Venezuelan crude. Earlier this month, Wright proposed having U.S. companies swap heavy crude from Venezuela for U.S.-produced light or medium crude better suited to the reserve.