The US emergency stockpile of crude oil has dwindled to its lowest level since 1982, prompting fresh concern that oil prices could surge if the Iran war drags on.
The Trump administration released another 5.3 million barrels in the past week as it tries to prevent the conflict from driving up oil prices and hitting the US economy.
The Strategic Petroleum Reserve (SPR) now sits at 293.4 million barrels, a level not seen since Ronald Reagan occupied the White House.
But the extra supplies from the US government’s storage caverns in Texas and Louisiana are doing little to keep oil prices in check.
The price of Brent crude jumped to $91 a barrel on Tuesday, the highest this month, as comments from Donald Trump dampened hopes of a reopening of the Strait of Hormuz.
Mr Trump told journalists on Monday that he was “not in a hurry” to end the conflict that has blocked up to one-fifth of global oil supplies, as a 60-day ceasefire expired without a deal to unblock the crucial Gulf waterway.
Traders fear that a prolonged closure of Hormuz will eat into global oil stockpiles, sending prices sharply higher – possibly even above the conflict-fuelled high of almost $126 in April.
The International Energy Agency (IEA) reported last week that the global oil supplies, at 102 million barrels a day in July, is still six million barrels less than a year ago.
Demand has also dropped, but only by an estimated 1.6 million barrels a day on average. The IEA said worldwide oil inventories shrank by another 69 million barrels in July.
Global stockpiles have dropped by 410 million barrels since the US and Israel attacked Iran on Feb 28, which led to the closure of the Strait of Hormuz, which normally carries a fifth of all oil and gas supplies.
“The urgency of reopening the Strait has increased, as previously available inventory buffers are rapidly depleting,” the IEA warned.
The US stockpile was about 415 million barrels before the war. Mr Trump ordered a phased release of 172 million barrels, which will ultimately shrink the SPR to just 243 million barrels.
The US’s Government Accountability Office warned in June that the SPR’s dilapidated storage infrastructure and damaged caverns meant that almost a quarter of the pre-war stockpile could not be drawn down.
The SPR was created in 1975, and reached a record high of 727 million barrels in 2010. Joe Biden, the former US president, released 180 million barrels in 2022 in response to Russia’s invasion of Ukraine.
Refilling the caverns to their current maximum capacity of 680 million would cost more than $37bn (£27bn) at current oil prices.
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