<p>The Trump administration plans to start refilling the nation’s emergency crude reserves in the coming months after releasing more than 130 million barrels of oil, which has caused inventories to fall to the lowest levels in decades.</p>
<p>“It’ll start being refilled in the next few months,” Energy Secretary Chris Wright stated regarding the Strategic Petroleum Reserve on Bloomberg TV.</p>
<p>The administration began drawing on the SPR in March as part of its strategy to limit the rise in oil and gasoline prices due to trade disruptions caused by the war in Iran.</p>
<p>At that time, the administration indicated it would release up to 172 million barrels of oil from the reserves. Under the terms of the deal, the barrels were not sold but loaned, with buyers legally obligated to return the original number of barrels plus a premium of up to 24% in additional oil.</p>
<p>Wright mentioned that those repayments are soon due. “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.”</p>
<p>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 secured, this would leave the SPR with 443 million barrels, approximately 28 million barrels more than what was recorded in January before the war began.</p>
<p>Refilling the SPR by purchasing oil on the market may be challenging, as prices for oil have recently surged above $100 per barrel.</p>
<p>Tensions in the Middle East escalated over the weekend, with global oil supply becoming more constrained due to attacks on the Saudi Arabian East-West Pipeline and the Iran-backed Houthis seizing a key island along the Bab el Mandeb Strait.</p>
<p>As a result, Brent crude rose to more than $109 a barrel as of 10:30 a.m. EDT on Monday, while West Texas Intermediate increased to just over $104 a barrel. Analysts express doubt that the administration would immediately commit to purchasing new barrels with crude prices above $100.</p>
<p>Industry experts have previously warned that even when WTI fell to the low $60s and high $50s last year, it was not sufficient for a rapid refill of reserves.</p>
<p>“We weren’t really anticipating there to be a refill unless we saw significant 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.</p>
<p>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.</p>