Trump announces massive oil purchase for strategic oil reserve
President Donald Trump announced on Friday that he had tasked the Energy Secretary to begin purchasing tens of millions of barrels of oil for the Strategic Oil Reserve. “We’re going to fill it to the top,” he said in a White House speech that mainly focused on the coronavirus response.
This move should bring some relief to U.S. oil producers as ExxonMobil (NYSE: XOM) and ConocoPhillips (NYSE: COP), which suffered from the fall in crude oil prices triggered by the oil price war between Saudi Arabia and Russia.
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According to Trump, buying oil will have many benefits, including “saving the US taxpayer billions and billions of dollars, helping our oil industry, and… that puts us in a very strong position, and we’re buying at the right price.”
The Trump administration has considered various measures to help those in difficulty Oil industry in the wake of the oil price crash and the anticipated declines in demand triggered by the coronavirus pandemic. On Tuesday, the administration suspended a previously announced sale of Reserve oil and met with oil industry lobbyists on Wednesday.
To the top
According to the Department of Energy, the Strategic Petroleum Reserve currently holds around 635 million barrels of oil. Energy Secretary Dan Brouillette announced on Twitter that the reserve currently has an additional 77 million barrels of unused capacity. Trump apparently intends to purchase the full amount of that amount in the days and weeks to come.
The move appeared to have an immediate effect: Crude oil prices rebounded 5% after the announcement. But it was still the worst week for oil prices since 2008.
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