US approves swap of up to 400,000 barrels of oil for Phillips 66 — OilPrice

The US Department of Energy has approved an emergency swap of up to 400,000 barrels of oil from the Strategic Petroleum Reserve for the Phillips 66 refinery in Lake Charles, Louisiana. The decision was made due to a temporary disruption in feedstock supplies to the facility, OilPrice reports.

Oil from a storage site in Louisiana

The oil is to be supplied from the West Hackberry storage site, which is part of the US Strategic Petroleum Reserve and is located in Louisiana. It can be delivered immediately. The Department of Energy did not specify the cause of the disruptions in feedstock deliveries.

Phillips 66 confirmed that it will receive the oil but declined to comment on the refinery's operations or commercial activities. A company representative said it does not expect an impact on production operations.

The Lake Charles refinery has a capacity of about 264,000 barrels per day. Thus, the approved volume corresponds to approximately one and a half days of processing at the facility.

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A swap, not a sale

The US government classifies the operation as a swap rather than a sale. Phillips 66 must return the received barrels to the reserve, adding a certain volume of oil as a premium.

This is not the first emergency use of the reserve in October. On October 10, the Department of Energy authorized a swap of up to 4 million barrels for ExxonMobil and BP following weather-related supply disruptions.

According to the Department of Energy, the reserve contained 282.7 million barrels of oil. OilPrice notes that some analysts consider this level to be the operational minimum. At the time of publication, Brent was trading at $117.04 per barrel and WTI at $103.52.