US Strategic Oil Reserve Falls to 44-Year Low Amid Iran War and Strait of Hormuz Disruptions
WASHINGTON:The United States’ Strategic Petroleum Reserve (SPR) has fallen to its lowest level in 44 years as the war with Iran and disruptions to oil shipments through the Strait of Hormuz continue to put pressure on global energy supplies.
According to international media reports, another 5.3 million barrels of crude oil were withdrawn from the US Strategic Petroleum Reserve last week, leaving approximately 293.4 million barrels in storage.
The Wall Street Journal reported that the level was the lowest since late 1982. Reuters also confirmed in a report published on August 17 that US emergency crude oil stocks had fallen to their lowest level since 1982.
Reuters said the US government has continued drawing oil from the reserve as shipping through the Strait of Hormuz has been severely disrupted. The recent decline in the SPR has occurred amid the war with Iran.
Following the start of the US-Israeli war against Iran in late February, shipments of crude oil and petroleum products through the Strait of Hormuz were severely disrupted.
The International Energy Agency (IEA) estimates that before the war, around 20 million barrels of crude oil and petroleum products passed through the Strait of Hormuz every day, representing roughly one-quarter of global seaborne oil trade.
The sharp decline in oil flows through the strait raised concerns over global supplies, prompting the United States and other IEA member countries to release emergency stocks into the market.
### US Pledged to Release 172.2 Million Barrels
On March 11, the 32 member countries of the IEA unanimously agreed to release 400 million barrels of oil from emergency reserves into the global market. It was the largest coordinated release of emergency oil stocks in the agency’s history.
According to the IEA, the United States is contributing the largest share, pledging to release 172.2 million barrels from its emergency reserves. The amount represents more than half of the SPR’s current volume.
Earlier in July, the US Strategic Petroleum Reserve had fallen to around 316.5 million barrels, its lowest level since April 1983. At the time, US authorities were implementing the emergency release program involving 172.2 million barrels in response to the Iran war.
With the latest withdrawals, the reserve has now fallen to approximately 293.4 million barrels, meaning tens of millions of barrels have been removed in just a few weeks.
The IEA has said that following the outbreak of the war, oil exports through the Strait of Hormuz fell to less than 10% of their pre-war level.
### Purpose of the Strategic Petroleum Reserve
The US Strategic Petroleum Reserve is the world’s largest government-owned emergency crude oil stockpile. It was established primarily to provide the country with an emergency supply of oil in the event of war, natural disasters or major disruptions to global energy supplies.
US law allows the reserve to hold up to 1 billion barrels of petroleum. However, continued withdrawals during the current crisis have pushed the stockpile to historically low levels.
### Why the 44-Year Low Matters
The current level of the US Strategic Petroleum Reserve is particularly significant because it has fallen to a level not seen in more than four decades.
The reserve was reported at approximately 316.5 million barrels in July, while the historical low recorded in 1982 was around 275 million barrels. The current level is now approaching that historic low.
This means that if the United States faces another major global oil crisis in the future, the government will have significantly less emergency crude available to release into the market than it did previously.
### Major Energy-Security Test for Washington
The IEA said in March that the release of 400 million barrels would provide important temporary support to global oil markets, but stressed that the long-term solution was the restoration of normal oil shipments through the Strait of Hormuz.
The decline of the US Strategic Petroleum Reserve to around 293.4 million barrels therefore represents more than a reduction in American emergency stocks. It highlights the close connection between the Iran war, the disruption of the Strait of Hormuz and global energy security.
If the Hormuz crisis continues for an extended period, the United States could face the dual challenge of dealing with elevated fuel prices while also rebuilding its rapidly depleted emergency oil reserves.
