To refill oil reserves.. Biden raises the purchase price of oil

US President Joe Biden’s administration has raised the price it is willing to pay to refill the country’s emergency oil reserves, which have dwindled to near their lowest levels in four decades.

The Department of Energy said in a statement that it will pay up to $79.99 per barrel to buy oil, which is the first time the administration has set an explicit price ceiling.

This is higher than the previous unofficial maximum of $79 and close to market prices. The Department of Energy also modified the pricing formula, allowing potential bidders to optimize hedging positions.

Traders expressed their dissatisfaction with the rules governing the sale of oil to the government, which they said did not keep pace with advanced methods of risk management at a time of geopolitical fluctuations and uncertainties. Under the new rules, the price is set on the day sellers are notified that they have won the trade, allowing traders to put hedging mechanisms into effect immediately. (Bloomberg)