US strategic oil reserve drops to 316.5 million barrels, lowest since 1983

The U.S. Strategic Petroleum Reserve fell 3 million barrels to 316.5 million last week, the lowest since April 1983, as the government continues drawdowns tied to a 172-million-barrel release agreement, Department of Energy data showed Sunday.

The drawdowns are part of a U.S. agreement to release 172 million barrels from the facility, according to the DOE. The reserve, created after the 1973-74 Arab oil embargo to cushion against supply disruptions, held about 560 million barrels at its peak in 2010 before Congress authorized multiple rounds of sales and exchanges over the past 15 years.

The latest weekly decline of roughly 3 million barrels extends a multiyear drawdown that has reduced the SPR by more than 40% from its 2010 peak. The reserve's current level of 316.5 million barrels is the lowest since the Reagan administration, when the U.S. was still rebuilding stockpiles after the 1979 oil crisis.

The shrinking emergency buffer coincides with a sharp escalation in geopolitical risk across the Middle East. Oil prices surged more than 4% over the weekend after President Trump said the U.S. was reinstating a naval blockade on Iran, while traffic through the Strait of Hormuz slowed to a two-month low as renewed U.S.-Iran strikes raised safety risks, according to ship-tracking data. WTI crude traded near $82 a barrel Monday, extending Friday's gains, as traders weighed dwindling U.S. emergency supplies against the risk of supply disruptions along a waterway that handles about a fifth of global petroleum consumption.

The cross-asset impact was immediate. The yield on two-year U.K. government bonds jumped to a one-month high Monday as the Iran-U.S. clashes pushed up global oil prices, while safe-haven demand lifted gold by about 1%. The broader risk-off tone reflected investor concern that a sustained disruption to Hormuz traffic could push crude prices above $100 a barrel for the first time since 2022, according to options market pricing.

A depleted SPR reduces the government's ability to respond to sudden supply shocks, potentially amplifying price swings in an already tight market. The last time the U.S. tapped the reserve in a coordinated emergency was in 2022, when the Biden administration released 180 million barrels to stabilize prices after Russia's invasion of Ukraine. That intervention helped cap Brent crude below $130 a barrel, but the current inventory of 316.5 million barrels is roughly half of what was available at the time.

The drawdowns come as OPEC further lowered its 2026 global oil demand growth forecast, the cartel said Sunday, citing weaker-than-expected consumption in China and Europe. The revision adds another layer of complexity to the supply-demand outlook, with the cartel's spare capacity estimated at about 5 million barrels a day, according to International Energy Agency data. The combination of falling SPR stocks, Middle East supply risks, and softening demand forecasts creates an unusually uncertain outlook for crude markets.

The SPR's decline also raises questions about the timeline and cost of refilling the reserve. Both the Biden and Trump administrations have explored replenishment strategies, but buying crude at current price levels would require significant budget outlays. The Department of Energy has not yet disclosed a formal refill schedule for the remainder of 2026, leaving the reserve's trajectory dependent on congressional appropriations and market conditions. At current WTI prices near $82, refilling the reserve to even 400 million barrels would cost roughly $6.8 billion.

This article is for informational purposes only and does not constitute investment advice.