US offers 11mn barrels of oil as Iran sanctions kick in

The sour, high-sulfur crude will hit the market in October and November, according to a notice of sale from the Energy Department.

Aug 21, 2018 01:08 IST India Infoline News Service

The US plans to release 11mn barrels of oil from its 660mn-barrel emergency stockpile, just as American sanctions on Iranian oil exports kick in.

The sour, high-sulfur crude will hit the market in October and November, according to a notice of sale from the Energy Department.

That timing may reflect the White House’s concern over a tight oil market amid the renewal of US sanctions on Iran, according to analysts at ClearView Energy Partners LLC. The Trump administration has asked allies to halt all imports of Iranian oil by November 4, stoking global supply fears.

Analysts have also speculated about whether President Donald Trump will announce an emergency release from the crude stockpile to lower US pump prices in the run-up to November’s mid-term elections.

Yet an 11-million-barrel sale over two months likely won’t do much to offset the impact of sanctions, which the administration estimates will remove 700,000 to 1mn barrels a day of Iranian crude from the global market by early November.

The October sale is part of a regular draw-down schedule to raise money for government programs. The Energy Department will draw crude from three sites that are part of the Strategic Petroleum Reserve: Bryan Mound and Big Hill in Texas, and West Hackberry in Louisiana.

Any further action by the president, who can release up to 30mn barrels in an emergency, is unlikely before the November 4 deadline, ClearView said.

Trump has proposed the sale of half of the stockpile -- which currently totals 660mn barrels -- to cut the budget deficit. Congress has so far authorized the sale of around 240mn barrels between 2017 and 2027.

Bids must be submitted no later than 2 PM (CST) on August 28, with contracts awarded within seven business days. Deliveries will take place in October and November, according to the notice.

Source: Bloomberg

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