The U.S. Strategic Petroleum Reserve has fallen to its lowest level since 1982 after years of drawdowns, leaving Washington with less capacity to calm oil markets six months into the U.S.-Israeli war with Iran. A further release tied to a March deal with the International Energy Agency would push the reserve close to levels experts call a safety threshold.
Reserve falls to lowest since 1982
The Strategic Petroleum Reserve, built in underground salt caverns along the Texas and Louisiana coasts, now holds just 289.7 million barrels, its lowest level since 1982. Presidents Joe Biden and Donald Trump drained the reserve over the past five years, and the war between the U.S., Israel and Iran that began on February 28 has kept Washington from rebuilding it.
The level could drop to about 243 million barrels if Trump releases a final batch of 39 million barrels under a March agreement with the International Energy Agency. That deal saw more than 30 countries agree to release a record 400 million barrels, with the U.S. contributing 172 million, to calm markets after the war began.
Aging infrastructure limits safe drawdowns
Oil in the caverns floats on water that rises as more crude is released, a process that can damage cavern walls, pipes and pumps. A Department of Energy source said the reserve's minimum operating level is 70 million barrels. Siddharth Misra, a professor of petroleum engineering at Texas A&M University, said that while the absolute physical floor for the reserve is also 70 million barrels, the practical minimum level for safe operations is close to 250 million barrels.
According to Reuters: "operating below 250 million barrels pushes the infrastructure into a dangerous zone", Misra said, adding his comments do not necessarily reflect his university's position. U.S. law also prohibits the president from ordering routine, small drawdowns once the reserve falls below 252.4 million barrels, though emergency releases remain possible.
Refill plans face a long timeline
Trump said Sunday the U.S. will refill the reserve using Venezuelan oil, though it remains unclear how quickly that could replenish supplies or ease gasoline prices. Washington is expected to reach a deal with Caracas this week that could give the U.S. control of a fifth of Venezuela's proved crude reserves.
The 172 million barrels released under the Trump administration were structured as a loan companies must repay with about 40 million barrels of additional oil, not due to finish until late 2028. Kevin Book, an analyst with ClearView Energy Partners, said in a research note that a full replenishment could take years and could be cut short by elections in both countries.
Analysts warn of thinner policy cushion
The reserve's decline follows the U.S. oil boom that began in 2008, which turned the country into a net total petroleum exporter and removed the need to meet an IEA requirement to store 90 days of net imports. Biden released about 230 million barrels beginning in 2021, including a record 180 million barrels after Russia invaded Ukraine in 2022, before the Iran war halted replenishment plans. Congress provided just $171 million toward refilling the reserve last year, far short of the roughly $20 billion needed at the time.
Clayton Seigle of the Center for Strategic and International Studies said at an August 24 event that thin reserves combined with limited OPEC spare capacity leave Washington less policy flexibility for future disruptions. Lutz Kilian of the Federal Reserve Bank of Dallas said market participants would likely worry more as the reserve nears its bottom. If it is tapped much further, Kilian said, oil prices could rise, harming the economy.
Source: Commodities & Futures News
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