In late December, United States’ Department of Energy (DOE) announced that it would start selling crude oil from the Strategic Petroleum Reserve (SPR) in 2017 as directed by the laws passed by congress. The sale of oil could begin as early as in January. The SPR was built in the United States in response to the Arab oil embargo in the 70’s that halted sales of crude oil to the United States by Gulf countries and triggered a massive inflationary rise and recession in the US. Currently, the SPR holds about 695 million barrels of crude oil. So the key question is, whether this selling of oil from SPR would impact crude oil prices in 2017 or not.

Theoretically speaking, even a small amount of crude oil will have some impact on prices, however, the way the sales from the SPR have been lined up, they are unlikely to have any major impact. DOE would sell around 190 million barrels from the SPR but it would be phased out over 9 years starting 2017. These sales reflect provisions in several recent statutes, including sections 403 and 404 of the Bipartisan Budget Act of 2015 (BBA), the Fixing America's Surface Transportation Act (FAST Act), which became law in December 2015, and the 21st Century Cures Act (Cures Act), which became law earlier this month.

While the exact amount of oil sold would depend on the price and DOE revenue objective for the year, in 2017 it is likely to remain somewhere around 17 million barrels and 25 million barrels for 2018. These numbers are minuscule compared to the daily consumption of crude, which is around 96 million barrels per day. Hence we don’t expect much of an impact on prices over sales from SPR.