A large portion of the barrels that will be offered from the U.S. Strategic Petroleum Reserve will likely be exported to China and India, traders said.
That’s because the supplies will consist of sour crude, a type of oil that U.S. refiners are shunning due to its high sulfur content, which makes it more expensive to process. For some foreign buyers, though, U.S. sour crude is attractive because it’s much cheaper than the global Brent benchmark.
The U.S. has already been selling oil from the SPR regularly this year, and a record volume of those barrels was exported in October.
China and India have been actively buying U.S. sour crude produced in the Gulf of Mexico. So, it’s easy to see why New Delhi and Beijing agreed to participate in the coordinated reserves release led by U.S. President Joe Biden.
U.S. sour crudes are currently trading at about $75 a barrel, while Brent is at about $82.