Emergency stockpiles of crude oil in the United States have hit the lowest level they have been since the 1980s, as the oil and gas markets grapple with the fallout from the war in Iran.
The monthslong conflict disrupted more than 11 million barrels per day of oil from global trade, threatening supply worldwide and causing international and domestic crude prices to spike. Several nations, including the U.S., agreed to release tens of millions of barrels back into the markets to ease supply constraints, as the Strait of Hormuz, a key channel for oil traffic, has effectively remained closed since February.
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The crucial waterway, which saw roughly 20% of global oil demand transit through before the war, was expected to fully reopen on Friday, President Donald Trump said on Sunday, as part of a newly reached ceasefire deal between the U.S. and Iran.
According to data released by the Department of Energy on Monday, there were 340.3 million barrels of crude in the Strategic Petroleum Reserve as of the week ending on June 12, the lowest level since 1983.
The U.S. first announced it would be drawing from its oil stockpiles in March, as part of a coordinated release with the International Energy Agency.
The U.S. alone said it planned to release 172 million barrels from the SPR by July.
The SPR was first created in 1975 in the wake of the Arab oil embargo, with the intention of protecting the markets and U.S. consumers from severe supply shocks and price spikes. It is one of the largest emergency crude inventories in the world, with a total capacity of around 714 million barrels across four main facilities.
This most recent draw, though, was expected to send the SPR to its lowest level since it was created, as there were just 415 million barrels left at the start of the year.
The Trump administration has primarily blamed the Biden administration for the low inventory, as former President Joe Biden approved the release of around 180 million barrels of oil. This draw, the largest from the SPR, was meant to combat skyrocketing oil and gas prices associated with Russia’s invasion of Ukraine.
When Biden took office, the SPR contained around 638 million barrels. It was left with roughly 364 million barrels when his term ended.
But the Biden release wasn’t the only recent draw that led to the low inventories.
Since 2015, Congress has authorized the sale of around 358.6 million barrels of crude between fiscal 2017 and fiscal 2031 to offset budget deficits.
And, during his first administration, Trump proposed selling off half the SPR as part of the administration’s 2018 budget.
By April of last year, the Department of Energy had sold around 119 million barrels from the SPR.
Over the last few weeks, industry experts have sounded the alarm that the dwindling stockpiles could cause even greater pain for drivers already hurting from increased prices at the pump.
“This should be very concerning to every American consumer,” American Petroleum Institute President and CEO Mike Sommers told CNN last week. “Because as those inventories go down and production isn’t increased, you’re going to start seeing a significant impact at the pump.”
However, some analysts are pointing out that consumers won’t feel any immediate effects.
“Multi-decade lows to an analyst is significant,” Patrick De Haan, head of petroleum analysis at GasBuddy, told the Washington Examiner.
“But the people out there driving for the summer … I would say for the average motorist, this is not yet something — they don’t need to panic over this,” he added.
Rather than worrying about what low inventories could do for gas and oil prices, De Haan instead said consumers should call on their representatives to push for the SPR to be refilled to its capacity.
The Trump administration is planning to add at least an additional 40 million barrels to the SPR on top of the amount released once the conflict is over.
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When the most recent drawdown was first announced, Energy Secretary Chris Wright said the Energy Department was moving to replace the released crude with around 200 million barrels in the next year.
If the administration is able to deliver on that promise, that would leave the SPR with around 443 million barrels — just 28 million barrels more than what was recorded in January.
