America’s oil safety net is shrinking fast — reserve falls to lowest level since 1983 – Firstpost

America’s emergency oil stockpile has fallen to its lowest level in more than four decades, underscoring how the recent Iran war and efforts to tame soaring fuel prices have depleted one of the country’s most important energy security buffers.

The US Strategic Petroleum Reserve (SPR) held just 340.3 million barrels of crude oil as of Monday, according to data from the Department of Energy, the lowest level since 1983. The latest figures come even as Washington and Tehran move towards ending a nearly four-month conflict and reopening the Strait of Hormuz, a key artery for global oil supplies.

The decline reflects a massive drawdown from the reserve as the US government sought to cushion consumers from surging fuel prices during the conflict, which disrupted oil shipments and rattled energy markets worldwide.

Third-largest drawdown on record

The SPR’s inventory fell by 8.9 million barrels in the latest reporting period, marking the third-steepest drawdown on record.

The withdrawals are part of a government programme under which energy companies can borrow crude from the reserve and return the volumes later with additional barrels as a premium. The Department of Energy has agreed to loan out 172 million barrels in an effort to increase market supplies and help lower fuel costs that climbed to multi-year highs during the conflict.

Officials argue the arrangement will stabilise energy markets without imposing any direct cost on taxpayers.

The latest decline pushed SPR inventories below the low reached during former President Joe Biden’s administration, when reserves fell to 346.8 million barrels following the record release of 180 million barrels after Russia’s invasion of Ukraine.

At the time, Republican lawmakers accused the Biden administration of using the reserve as a political tool and warned that aggressive drawdowns could damage the salt caverns used to store crude oil. The administration rejected those claims.

Iran war leaves inventories depleted

The sharp fall in emergency reserves comes against a backdrop of tightening oil supplies across the United States.

Government data show overall crude inventories — including both commercial stockpiles and the Strategic Petroleum Reserve — have fallen sharply since the Iran war erupted in late February. Strong refining activity and robust exports of US crude helped fill supply gaps created by disruptions in West Asia, accelerating inventory declines.

Stocks at Cushing, Oklahoma — the delivery point for US West Texas Intermediate crude futures and one of the country’s most important oil storage hubs — have dropped to just 21.6 million barrels, close to operational minimum levels. The decline has heightened concerns about supply tightness despite the recent easing in crude prices following the US-Iran peace agreement.

Analysts say the inventory drawdown highlights the extent to which the conflict strained global energy markets even though the United States remains one of the world’s largest oil producers.

A smaller buffer against future shocks

The latest figures have reignited debate over the role of the Strategic Petroleum Reserve, which was created after the 1970s oil crises to provide a cushion against major supply disruptions.

The reserve serves as America’s emergency stockpile during wars, natural disasters and geopolitical crises. With inventories now at their lowest level in 43 years, some energy experts warn that the country’s ability to respond to another major supply shock could be more limited than in previous decades.

Supporters of the recent drawdowns argue that the reserve fulfilled its intended purpose by helping stabilise markets during a period of extraordinary disruption. Critics, however, contend that the US has become increasingly reliant on emergency inventories at a time when geopolitical risks remain elevated.

While optimism surrounding the US-Iran agreement has eased concerns over immediate supply disruptions and pushed oil prices lower, the reopening of the Strait of Hormuz is expected to take time as shipping channels are cleared and insurers return to the region.

That means the world’s oil market — and America’s shrinking emergency reserve — could remain under scrutiny for weeks to come.