Biden Administration Raises Oil Reserve Purchase Price to Address Volatility and Geopolitical Risks

The Biden administration has increased the price it is willing to pay to fill the country’s emergency oil reserves, which have reached a four-decade low. The Energy Department announced in a filing that it will pay up to $79.99 per barrel, surpassing the previous informal limit of $79. Traders had previously criticized the rules governing oil sales to the government, arguing that they did not adequately address the risks associated with volatility and geopolitical uncertainty. Under the new system, the price will be determined when sellers receive notification of their win, allowing for quick implementation of hedging measures. The government has historically sold oil from its stockpiles during periods of disruption, most notably releasing 180 million barrels two years ago after Russia invaded Ukraine. This move is closely watched by oil analysts, as it can significantly impact global oil prices. The Department of Energy is currently seeking bids for 3.3 million barrels of sour oil, with submissions due on May 14 and remaining valid until May 23.