The 15 million barrels are the final tranche of a disbursement of 180 million announced in March and come as energy prices threaten to rise again less than a month before Election Day.
Rising prices have emerged as a drag on Democrats as polls show the economy is one of the issues most top of mind for voters as they head to the ballot box. Early voting began in some states this week.
The sale comes after OPEC+ announced a production cut of 2 million barrels of oil per day earlier in October. Oil prices had dipped as low as $75 per barrel in September before rebounding after the OPEC announcement to more than $90. West Texas Intermediate crude is now at $83 per barrel.
Asked about the possibility of limiting oil exports, officials also said they’re keeping “all tools on the table.”
The U.S. oil reserve is now at its lowest level since the mid-1980s, and senior administration officials announced Tuesday evening a plan to buy back crude oil to replenish the Strategic Petroleum Reserve, sending a market signal to producers to keep pumping oil ahead of the midterm elections in November.
Officials said repurchases would begin when prices are between $67 and $72 per barrel, indicating that the administration would like to see the price of oil decline.
President Biden wants the energy sector to “take the signal and increase production” and to make sure that they are giving “the consumer the appropriate price” as they are “taking these profits,” one senior administration official said.
“The profit that energy refining companies are now capturing on every gallon of gasoline is about double what it typically is at this time of year, and the retailer margin over the refinery price is more than 40 percent above the typical level,” administration officials said in a statement.
“These outsized industry profit margins – adding more than $0.60 to the average price of a gallon of gas – have kept pump prices higher than they should be. Keeping prices high even as input costs fall is unacceptable, and the President will call on companies to pass their savings through to consumers – now,” the statement continued.
The Department of Energy will also institute a rule that allows it to enter fixed-price contracts through competitive bids for crude oil products to be delivered at future dates.
Geopolitical forces are bearing down on energy markets now as the Northern Hemisphere prepares for winter.
The war in Ukraine is playing out in the European energy supply, which has been heavily dependent on Russian gas exports in the past. Reports of pipeline sabotage came in over the summer as fighting intensified between Russia and Ukraine.
OPEC’s production cut resulted in accusations against its most influential member, Saudi Arabia, that it was siding with Russia in the war.
Chinese demand for imported also may also be ramping up as the country continues to lift various COVID-19 restrictions.