Iran deal came in time as Strategic Petroleum Reserve hits lowest level since 1983
The US Strategic Petroleum Reserve has fallen to its lowest level in more than 40 years as emergency stocks were released to ease supply disruption triggered by the Iran war.
According to data released on Monday, the SPR reached 340.3 million barrels as of June 12, the lowest level since the summer of 1983. Ministry of Energy. Reserves fell by nearly 9 million barrels on a weekly basis.
The agreement that the United States and Iran will sign on Friday to reopen the Strait of Hormuz comes as oil executives warn that global stocks are rapidly falling to critical levels.
“We are approaching previously unheard of inventory levels,” Exxon senior vice president Neil Chapman said at a conference hosted by Bernstein in New York on May 28. Chapman had warned that oil prices would rise as stocks fell while fuel demand was expected to peak in the summer months.
Stockpiles will continue to dwindle even after the U.S.-Iran deal goes into effect, as it will likely take weeks or months for oil flows through Hormuz to return to normal.
“We still have stock draws. They’re relentless and they’re already at historic lows,” said Bob McNally, president of consulting firm Rapidan Energy. “We don’t think we’re out of control in terms of the upper pressure on prices.”
The US agreed to remove 172 million barrels from reserves at the beginning of March. This was part of a coordinated release of 400 million barrels of oil by members of the International Energy Agency; this was the largest intervention in the organization’s history.
“The US is the supplier of last resort,” said Matt Smith, director of commodity research at Kpler. “Everyone comes to the United States to extract barrels because they are not available anywhere else.”
President Donald Trump has repeatedly criticized the Biden administration for releasing barrels from the SPR following Russia’s invasion of Ukraine. The SPR reached 346 million barrels in July 2023, the lowest level of the Biden era.
