Oil stocks in US strategic reserves at lowest level since 1983

Oil stocks in the US Strategic Petroleum Reserve (SPR) have fallen to 340.3 million barrels, their lowest level since 1983. This is according to data published by the US Department of Energy. The figures show how tight the market is at a time when the US and Iran have agreed to end the war and reopen the Strait of Hormuz, Reuters reported.

SPR oil stocks fell by 8.9 million barrels last week, the third-largest weekly decline on record. The drawdown is part of a programme under which the US lends oil to the market to curb rising fuel prices, which have climbed to multi-year highs in recent months.

In early March, the US agreed to release 172 million barrels from its strategic reserves. The decision was part of a coordinated release of 400 million barrels by members of the International Energy Agency (IEA). This was the largest release of reserves in the organisation’s history.

The decline in stocks comes amid increased demand for US oil. Commercial stocks and strategic reserves have both fallen significantly since the start of the war with Iran in late February. The reason is strong demand from refineries and exporters, which are helping to replace shortfalls in global market supplies. Stocks in Cushing, Oklahoma, the main storage hub for US WTI crude, have also approached the operational minimum, fuelling concerns about tight market conditions.

The volume of oil in the SPR has fallen below the level recorded under former President Joe Biden, when reserves hit a low of 346.8 million barrels following the record release of oil onto the market after Russia’s invasion of Ukraine.

Under the current programme, companies must later return the oil they borrow, along with an additional quantity as a form of interest. The Department of Energy says this mechanism helps stabilise the market at no cost to US taxpayers.