A reader asked how long would 50 million bbls of crude oil -- the amount released from the SPR -- would last.
My quick reply:
Global demand is 100 million bbls per day.I believe the SPR has been drawing down at 18 million bbls / day, so the 50 million-bbl release was only 38 million bbls more than usual.US daily oil consumption: about 20 million bbls/ day.I believe the US exports about 3 million bbls of oil / day.The SPR can release no more than 4.4 million barrels per day. It takes at least 13 days from a presidential decision for the first oil to enter the U.S. market, according to the Energy Department.I'll have to add these numbers to my post on this subject today.So, starting two weeks from today, the SPR can release 4 million bopd. 50/4 = and over two weeks will exhaust the 50 million bbls.The refiners have "x" amount of capacity. For the past year or so, they have been operating well below capacity. They are operating at about 87% of their maximum capacity. If push came to shove, the refiners could get to 94% fairly quickly; that report comes out every Wednesday and I track it every week. The refiners' data will be the most important thing to watch.4 million bbls / day released; consumption + export = 23 million bbls of oil daily.4 / 23 = 17%.My hunch: the US refiners won't be able to handle all this oil; even if they could, the US demand is not there and oil companies are not going to sell gasoline at a loss. If Biden doesn't ban oil exports, my hunch most of this oil will be shipped to and bought by China.
From twitter after this debacle:
- Bloomberg: much of this oil will end up in China and India.
- We can drill to refill, I suppose.
- It wasn't even a release; it was a swap. And because of types of oil involved, prices will be driven up.
- Brandon released the wrong kind of oil.
- No export restrictions; one-third or more will be exported to China.
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