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U.S. Plans To Lease Oil Tanks In Strategic Reserve

U.S. Plans To Lease Oil Tanks In Strategic Reserve 27.03.2020


U.S. Plans To Lease Oil Tanks In Strategic Reserve

The United States plans to lease oil storage capacities to energy companies in the country's strategic reserve. The initiative was proposed due to the refusal of the government to buy oil in the strategic reserve of the country after it was not possible to obtain congressional approval to finance this action. The lease may help the U.S. to deal with a growing surplus in the oil market.

In March, the U.S. Department of Energy announced its plans to buy 77 million barrels of oil on the domestic market for a strategic reserve that is slightly less than what the country uses in four days. The first batch was to be 30 million barrels. Today, salt storage facilities in Texas and Louisiana contain about 635 million barrels of oil.

Demand for oil began to fall due to the spread of coronavirus and the government action to combat it: the borders are closed all over the world and movement is limited, shops and production are closed. At the same time, Russia and Saudi Arabia could not agree to extend the OPEC+ transaction to limit production and said they plan to significantly increase production. As a result, oil prices collapsed.

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