US emergency oil reserve sinks to 1982 low

US emergency crude holdings have fallen below 300 million barrels for the first time in more than four decades as Washington continues drawing oil from the Strategic Petroleum Reserve to cushion energy markets from Middle East supply disruptions.

Stocks in the Strategic Petroleum Reserve dropped by about 5.3 million barrels during the week ended August 14 to 293.4 million barrels. That was the lowest level since December 1982 and marked another sharp reduction in the emergency stockpile established to protect the country against severe disruptions in petroleum supplies.

The latest draw followed months of withdrawals under a programme authorised after conflict involving the US, Israel and Iran severely disrupted oil movements through the Middle East. Washington committed in March to make 172 million barrels available from the reserve as its contribution to a broader International Energy Agency emergency action.

IEA member countries agreed on March 11 to release 400 million barrels of oil and petroleum products from emergency stocks, the largest coordinated release in the organisation’s history. The measure was designed to soften the economic impact of supply interruptions and extreme volatility after tanker movements through the Strait of Hormuz were heavily disrupted.

The US share represented 172 million barrels, with deliveries originally expected to take about 120 days. The Energy Department began the process through emergency exchanges, initially offering as much as 86 million barrels in the first tranche. Companies obtaining crude through the exchanges are required to return equivalent volumes later, together with additional barrels as a premium.

The scale of the withdrawals has transformed the reserve’s position within months. It held about 415 million barrels in early March. By late April it had declined to 397.9 million barrels after 17.5 million barrels had been released. The stockpile fell to 340.3 million barrels by mid-June, 325.7 million at the end of that month and 311.4 million in the week ended July 17.

The accelerating drawdown has revived debate over how much emergency capacity Washington should preserve while geopolitical threats remain elevated. The reserve reached a record 707.21 million barrels in 2008, meaning the latest stock level is less than half that peak. Its crude is stored in underground salt caverns along the Gulf Coast and can be released during major supply emergencies.

Pressure on the stockpile comes despite substantial commercial crude holdings. Commercial US inventories jumped by 17.4 million barrels to 424.4 million barrels in the week ended August 7, their largest weekly increase since January 2023. The build reflected weaker exports and stronger imports, providing some near-term cushioning even as government-controlled emergency stocks continued shrinking.

Energy markets, however, remain dominated by the Middle East supply outlook. The IEA has projected global oil supply at about 102.02 million barrels a day during 2026 after lowering its forecast amid disruptions linked to continuing conflict, tanker attacks and constrained regional production. Its estimates point to a supply deficit of about 1.27 million barrels a day against expected demand.

Oil prices rose by more than $2 a barrel on Monday as stalled diplomacy involving Washington and Tehran and continued uncertainty over shipping through Hormuz strengthened concerns about available supplies. The continuing drain on US strategic stocks adds another dimension to those worries because the government’s ability to respond to another major disruption declines as inventories are drawn down.

Washington has indicated that barrels released through the emergency exchange system will ultimately be returned, potentially allowing the reserve to recover without conventional purchases of the entire withdrawn volume. The administration had also said when announcing the March action that arrangements existed to replace roughly 200 million barrels within the following year.