US oil reserve sinks towards four-decade low

The US Strategic Petroleum Reserve has fallen below 300 million barrels, deepening concerns over Washington’s emergency oil cushion as prolonged Middle East supply disruptions force further withdrawals from government stockpiles.

Federal inventory data for the week ended August 7 put the reserve at about 298.7 million barrels after a weekly draw of roughly 6.1 million barrels. That was the lowest level since 1983 and extended a sharp depletion that has gathered pace since Washington joined a coordinated international effort to release emergency oil following disruption to supplies from the Gulf.

A widely circulated claim that the reserve has already dropped to 293.4 million barrels would represent another decline of more than 5 million barrels. However, the latest fully published weekly federal data available as of Monday show 298.7 million barrels, meaning the 293.4 million figure has yet to be confirmed in the regular weekly inventory series.

The downward trajectory is nevertheless clear. The reserve has lost more than 100 million barrels since the escalation of the conflict with Iran earlier this year, reversing much of the replenishment that had taken place after the large drawdowns of 2022 and 2023.

Washington committed in March to release 172 million barrels from the Strategic Petroleum Reserve as part of a 400 million-barrel emergency action agreed by members of the International Energy Agency. The programme was intended to ease the impact of disrupted crude flows through the Strait of Hormuz and prevent a sustained surge in fuel prices.

The Strait of Hormuz normally handles about a fifth of global petroleum liquids consumption and is particularly important for exports from Saudi Arabia, the United Arab Emirates, Kuwait, Iraq and Qatar. Restrictions on tanker movements and interruptions to regional production have placed unusual pressure on emergency stockpiles across major consuming economies.

US officials initially said the 172 million-barrel release would be delivered over roughly 120 days. Energy Secretary Chris Wright also said the administration intended eventually to replace about 200 million barrels, although replenishing stocks on that scale would depend on crude prices, congressional funding and the availability of storage capacity.

The reserve held around 415 million barrels in late March before withdrawals accelerated. By May, weekly releases had reached exceptionally high levels, including a draw of about 8.6 million barrels in one week. Stocks slipped to 340.3 million barrels by mid-June and fell below 312 million barrels by mid-July.

The decline has pushed inventories beneath the lows reached during the Biden administration, when large releases were authorised after Russia’s invasion of Ukraine sent international crude and petrol prices sharply higher.

The reserve is stored mainly in underground salt caverns along the Gulf Coast in Texas and Louisiana. Its nominal capacity is substantially higher than present holdings, although operational constraints mean not every barrel can necessarily be delivered to the market at the same time.

Questions over usable capacity have become increasingly important as inventories shrink. The ability of the reserve to respond to another major disruption depends not only on the total amount of crude underground but also on cavern conditions, pipelines, marine terminals and the maximum rate at which oil can be withdrawn.

The depletion comes while commercial US crude inventories have moved in the opposite direction. Stocks outside the reserve jumped by 17.4 million barrels to 424.4 million barrels during the week ended August 7, one of the largest weekly increases on record.

That build was driven partly by weaker exports and higher imports. Crude exports dropped to about 3.06 million barrels a day, while large inflows contributed to a particularly strong increase in Gulf Coast inventories. The rise in commercial stocks temporarily offset some of the concern generated by the continued draw from strategic reserves.

The broader oil market remains vulnerable to developments in the Middle East. Global inventories have been falling as restrictions on Gulf exports remove millions of barrels from normal trade flows. Brent crude is expected to remain elevated during the third quarter while constraints around the Strait of Hormuz persist.

The US Energy Information Administration expects Brent to average about $85 a barrel during the third quarter of 2026 before easing as disrupted production and shipping recover. It also expects US crude production to average about 13.8 million barrels a day this year, highlighting the dramatic transformation of the country’s energy position since the reserve was created after the 1970s oil shocks.