August 31, 2018 / 10:14 PM / a year ago

U.S. sells 11 million barrels of oil from reserve to Exxon, five other firms

WASHINGTON (Reuters) - Six companies, including ExxonMobil Corp, bought a total of 11 million barrels of oil from the U.S. Strategic Petroleum Reserve, a Department of Energy document showed on Friday, in a sale timed to take place ahead of U.S. sanctions on Iran that are expected to remove oil from the global market.

Sale of the oil from the reserve was mandated by previous laws to fund the federal government and to fund a drug program, but the Trump administration took the earliest available time to sell the crude under the law.

The sale’s timing “would appear to reflect President Donald Trump’s concern regarding oil market tightness associated with the reinstatement of Iran oil sanctions,” analysts at ClearView Energy Partners said after the sale was announced on August 20.

In May, Trump pulled the United States out of the Iran nuclear agreement between five other world powers and Tehran. The administration is urging countries to cut purchases of Iranian oil from the Islamic Republic to zero or face possible sanctions after November.

The United States in certain cases will consider waivers for countries that need more time to wind down imports of oil from Iran while reimposing sanctions against Tehran, U.S. Treasury Secretary Steven Mnuchin has said.

Exxon bought about 3.3 million barrels of oil from the reserve, held in a series of underground caverns in Texas and Louisiana. The other companies purchasing the oil were Marathon Petroleum Corp, which bought nearly 1.4 million barrels, Motiva Enterprises LLC, with 2.4 million barrels, Phillips 66, with more than 2 million barrels, Royal Dutch Shell PLC, with nearly 1.6 million barrels, and Valero Energy Corp bought 330,000 barrels.

The oil, for shipping by both pipeline and vessels, sold in a range of $67.66 a barrel to $69.05 a barrel.

Reporting by Timothy Gardner; Editing by Bill Berkrot

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