The US strategic oil stockpile has fallen to its lowest level in more than 40 years as emergency reserves are released to ease supply disruptions caused by the Iran war.
The SPR stood at 340.3 million barrels as of June 12, the lowest level since the summer of 1983, according to data released Monday by the Department of Energy. Reserves decreased by nearly 9 million barrels from the previous week.
The deal the United States and Iran are expected to sign on Friday to reopen the Strait of Hormuz comes as oil company executives warn that global stocks are rapidly declining to critical levels.
“We are approaching unprecedented inventory levels,” Exxon Senior Vice President Neil Chapman said at a conference hosted by Bernstein in New York on May 28. Mr Chapman warned at the time that oil prices would rise as summer fuel demand peaks and inventories fall.
Stocks will continue to decline even after the U.S.-Iran deal is implemented, as it will likely take weeks or months for oil flows through Hormuz to normalize.
“We’re still going to see inventory withdrawals,” said Bob McNally, president of consulting firm Rapidan Energy. “The inventory is unrelenting and already at historic lows.” “I don’t think we’re out of the woods in terms of upward price pressure.”
In early March, the United States agreed to release 172 million barrels from its reserves. It was part of a coordinated release of 400 million barrels by International Energy Agency member states, the largest intervention in the agency’s history.
“The United States is a supplier of last resort,” said Matt Smith, director of commodity research at Kpler. “Everyone is coming to the U.S. to get their barrels out because they can’t get them anywhere else.”
President Donald Trump has repeatedly criticized the Biden administration for releasing the barrel of the SPR after Russia’s invasion of Ukraine. SPR hit a Biden-era low of about 346 million barrels in July 2023.
