CERAWEEK: US SPR to release at rate of 1 million-1.5 million b/d: Wright

Barrels from the US Strategic Petroleum Reserve will be released at a flow rate of 1 million-1.5 million barrels/day, US Energy Secretary Chris Wright said, adding that the total International Energy Agency coordinated releases should reach a rate of 3 million b/d.

Wright's comments, during an interview at CERAWeek by S&P Global March 23, were the Department of Energy's first public confirmation of the speed at which it plans to release 172 million barrels into the market.

The US' pledge is part of a coordinated IEA effort to release 400 million barrels, as US and European leaders attempt to minimize price increases and supply disruptions from the war in the Middle East.

Wright said the US was executing on its release plan faster than many analysts projected. The first barrels began to flow March 17, the same day DOE announced agreements with eight companies for the exchange of 45.2 million barrels. The barrels are scheduled for delivery from April 1 to May 31, with a provision allowing for early deliveries.

"I saw the press," Wright said. "'Oh, they can't do it for three weeks, it's never been done before.' Oil started to flow out of US stocks Friday afternoon."

Wright also touted the US' decision to exchange barrels, rather than sell them to the market outright, and said the US will receive 1.2 barrels back into the reserve by the end of 2027 for every barrel it releases.

"We're actually engaging in swap contracts," Wright said. "We're releasing barrels today, and the first deals we made for every barrel we release, we're going to get back more than 1.2 barrels of oil that will go back into the reserve next year. So at the end of this conflict, at the end of next year, we'll have meaningfully more oil in the SPR than we have today."

No demand destruction

Oil prices fell on March 23 after US President Donald Trump said the US will postpone strikes against Iranian power plants and energy infrastructure.

NYMEX WTI front-month crude futures settled at $88.13/b, down $10.10 day over day, and down from a recent peak of $98.71/b on March 13.

"Prices went up to send signals to everyone that can, produce more. Please, produce more," Wright said. "Prices have not risen high enough yet to drive meaningful demand destruction, but Americans and energy entrepreneurs around the world are ingenious."

Wright pointed to progress in releasing emergency oil inventories, with a focus on supplying Asia.

"Because where is the problem most intense? It's in Asia. We want to get oil into the Asian refineries and have as little downturn in refining capacity as possible," he said.

Asia-Pacific refiners are diversifying their crude buying in the wake of limited export capacity through the Strait of Hormuz, sparking an increase in oil tanker fixtures from the US Gulf Coast, Platts data showed.