US Oil Reserve Hits Record Low Amid Iran War and Global Energy Shortage

The US Strategic Petroleum Reserve has hit its lowest level in over four decades. According to data from the Department of Energy, the reserve dropped by more than 3 million barrels over the week ending August 28, leaving it at 286.6 million barrels, about 40% of overall capacity.

This is a worrying sign for the US as it weathers a global energy shortage and soaring oil prices. The largest global oil supply disruption on record has pushed US gasoline prices above $4 a gallon, reigniting inflation concerns.

The Strategic Petroleum Reserve was established after the Arab Oil Embargo in the early 1970s to protect the US against sudden supply crunches. It can hold up to 714 million barrels of oil and is stored in high-security underground salt caverns along the Gulf Coast.

The President has the discretion to release oil from the reserve when statutory conditions are met, which typically involves selling it on the open market to increase supply and bring down prices. In response to the Iran war, the International Energy Agency announced a combined 400 million barrel release among its member nations, including the US.

The US committed to releasing 172 million barrels from its reserve as part of this effort, with about 128 million barrels already released since the conflict began. The most recent drawdown was authorized by President Joe Biden in March 2022 after a spike in oil prices following the Russian invasion of Ukraine.