New York (CNN) — When he launched his presidential campaign in late 2022, then-candidate Donald Trump blasted his successor for aggressively releasing oil from America’s emergency stockpile ahead of the midterm elections.
“The strategic national reserves, which I filled up, have been virtually drained in order to keep gasoline prices lower, just prior to the election,” Trump said during his 2024 campaign launch at Mar-a-Lago, referring to President Joe Biden’s record-setting releases from the Strategic Petroleum Reserve (SPR).
But now, as voter frustration over high gas prices mounts, President Trump is draining the nation’s pile of emergency oil at an even faster pace than Joe Biden ahead of this year’s midterms.
Not only has the magnitude of SPR releases under Trump surpassed records, but the amount of crude left in the reserve is approaching the lowest levels since the early 1980s. Back then, the United States had a far smaller economy that consumed less energy.
The emergency steps taken this spring underscore the scale of the oil crisis set off by the war with Iran and the scramble around the world to replace crude trapped in the Persian Gulf.
The shrinking pile of emergency oil also serves as a reminder of how U.S. officials will need to refill the SPR afterwards, an endeavor that will keep both demand and prices high.
“This isn’t like a cookie jar. Those barrels have got to be put back at some point and that will lead to higher prices,” said Matt Smith, lead oil analyst at energy intelligence firm Kpler.
SPR is 50 million barrels smaller than pre-war
Of course, moments like this are exactly what the SPR is designed for.
Located in a series of underground salt caverns in Texas and Louisiana, the SPR is the world’s largest stockpile of emergency crude. It’s been used by Republican and Democratic presidents alike during wars, hurricanes and other supply disruptions.
For example, Biden aggressively tapped the SPR after Russia invaded Ukraine in 2022, spiking gasoline prices above $5 a gallon for the first time ever. The amount of oil in the SPR plunged from about 638 million barrels in January 2021 to a 40-year low of 347 million barrels by July 2023, according to federal data.
The effective shutdown in late February of the Strait of Hormuz, the most critical chokepoint for energy in the world, has derailed more than 1.2 billion barrels of crude, according to S&P Global Energy.
To help fill the gap, the SPR released 9.1 million barrels of crude last week alone, according to federal data. That’s just shy of the all-time high set the prior week.
Since the war with Iran started, the amount of oil in the SPR has dropped by about 50 million barrels, or 12%, to 365 million barrels – the lowest since April 2024, according to the U.S. Energy Information Administration.
Notably, that emergency crude isn’t just supply for U.S. refineries. About half of the crude released in April and May have been exported, according to Kpler estimates.
“The U.S. is basically the supplier of last resort. The rest of the world needs that crude,” Smith said.
Countries in Asia and Europe have been hit particularly hard by the closure of the Strait of Hormuz, leading them to turn to U.S. crude as a replacement.
It’s a trend that will likely continue as the crisis drags on.
“Even if a deal is done tomorrow, it will probably take six weeks to unbottleneck the strait, only adding to pressure in inventories during peak summer demand season,” Helima Croft, global head of commodity strategy at RBC Capital Markets, told CNN in an email. “Europe could easily see rationing.”
‘Operationally low levels’
US commercial oil inventories are draining fast, too.
The market pays particular attention to the amount of crude stockpiled at Cushing, Oklahoma, because that’s where West Texas Intermediate (WTI) crude oil futures are priced.
Kpler data indicates Cushing inventories have declined from about 33 million barrels seven weeks ago to approximately 24.5 million now. That’s closing in on the “operationally low levels” of about 20 million barrels, Kpler’s Smith said.
“You can’t draw them down to zero because there is gunk at the bottom of the tanks. You need a certain volume to keep them operational,” he added.
Croft agreed that the world is “fast approaching tank bottoms” but noted the market reaction is mild, blunted by promises of an imminent U.S.-Iran deal.
“Market participants have been anesthetized by the constant ‘over soon’ messaging,” Croft said.
Limits on exports?
The surge of US exports, coupled with shrinking emergency and commercial stockpiles, may tempt US officials to consider the nuclear option: restricting or even banning exports.
Limiting or banning exports could temporarily lower U.S. gas prices, but analysts warn such a move risks further destabilizing the global energy system and doing severe damage to U.S. refineries and producers.
The White House has stressed that such a move is not currently on the table.
Smith, the Kpler analyst, argued that rather than export restrictions, market forces will eventually put a halt to US exports.
He said shrinking oil inventories, especially at Cushing, will narrow the gap between WTI and Brent crude (the global benchmark) to the point that it makes U.S. barrels less attractive to overseas buyers.
“But when the music stops and the U.S. is no longer supplying barrels to the market,” Smith said, “where will other countries go for crude?”
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