SPR management blamed for Brent squeeze. (Market distortions).(Strategic Petroleum Reserve)

The US Department of Energy's mismanagement of its Strategic Petroleum Reserve (SPR) fomented a squeeze on Brent crude in late 2001 and early 2002, when it accepted 25mn bl for deposit in the SPR, a Senate panel concludes in a report issued last week.

"The placement of so much Brent crude oil into the SPR created a shortage of Brent," the report says. "This shortage drove up the price not only of Brent, but also other crude oils linked to the price of Brent. These price increases pushed up the cost of crude oil exports to the US from Europe and Africa."

Brent's benchmark role meant the squeeze led to a spike in global prices. It tightened refining margins for gasoline and caused higher retail prices for distillates and jet fuel, say members of the Senate Governmental Affairs Committee's Permanent Subcommittee on Investigations.

The investigation into Brent and the SPR stemmed from the subcommittee's enquiries into high retail gasoline prices in 2000 and early 2001. The subcommittee wondered if the high Brent prices contributed to those gasoline prices. But it found instead that, while the later Brent squeeze led to higher retail prices for some fuels, a rise in gasoline imports ...