The nation’s emergency reserve for oil and fuel supplies is slipping below Biden-era lows to its most exhausted level since the Reagan era—when the nearly 50-year-old U.S. Strategic Petroleum Reserve was still being filled up.
The SPR will hit its lowest volumes since 1983 any day now—if not already—and continue sinking lower as the Trump administration leans on its reserves to keep oil exports flowing to the rest of the world—and to stop domestic prices from further skyrocketing.
As global commercial and strategic oil reserves continue to be depleted—and the Strait of Hormuz in the Middle East remains effectively closed—the fear is it’s just a matter of time before resilient energy markets finally begin to “panic” and fuel prices soar more uncontrollably, whether that’s in July or August, said Patrick De Haan, head of petroleum analysis at GasBuddy.
“It’s a pretty monumental number to hear multi-decade lows reached,” De Haan told Fortune. “The longer this goes on, the fewer tools the administration has in dealing with it, and the more risk there is to a slingshot for costs.”
The administration has drained 66 million barrels—as of June 5—and counting from the SPR since the war in Iran began, according to the U.S. Department of Energy. Trump has authorized the overall release of 172 million barrels over several months. The companies buying the barrels are pledging to replenish them.
The SPR hit a three-year low of 349.2 million barrels on June 5, and it’s being drained by close to 9 million barrels every week. The Biden-era low was 346.7 million barrels in July 2023, steadily growing from there until the Iran war.
Going any lower puts the SPR at levels not seen since August 1983.
Emergency supplies
The 50-year-old Strategic Petroleum Reserve, which was initiated in the aftermath of the Arab oil embargo, received its first barrels of oil in 1977 and steadily grew through 1990 to nearly 600 million barrels. The SPR peaked at an all-time high of 726.6 million barrels in the final week of December 2009.
The SPR is a series of 60 oil-filled salt caverns in southern Texas and Louisiana.
To be fair to Trump, the SPR shrunk by 243 million barrels during the Biden administration as former President Biden responded to pandemic-era supply-chain disruptions and then the Russian invasion of Ukraine.
Biden was sharply criticized by Republicans for using emergency reserves to help alleviate high fuel prices—even though there was never a true fuel shortage, which is similar to today.
Most countries in the world hold only limited emergency supplies, and U.S. petroleum reserve barrels trail only those of China.
China holds the world’s largest strategic and commercial oil inventory, with an estimated 1.4 billion barrels in reserve as of February—more than quadruple the U.S. reserves. In recent years, China has focused on buying up and storing many millions more barrels of oil.
The massive stockpile has insulated China from supply shortages, allowing it to lean on its reserves and drastically reduce its oil imports the past few months. At some point, China will have to start buying more oil again, but the exact timing is unclear in the coming months, De Haan said. China also is rapidly transitioning to electric vehicles. The majority of new-car sales in China are EVs, but EVs still only represent about 15% of vehicles on the roads in China.
The combination of smaller Chinese imports, larger U.S. exports, and conservation efforts in other countries has kept oil prices from further skyrocketing—for now. Saudi Arabia and the United Arab Emirates also have kept limited oil exports flowing thanks to cross-country pipelines that allow them to bypass the Strait of Hormuz.
Still, global stockpiles continue to be depleted, and energy analysts recognize the current situation cannot last much longer.
“Nobody really has the answer for when we’re going to hit those [tipping point] levels,” De Haan said.