US emergency oil reserve drops to 357M barrels amid Iran war

The U.S. Strategic Petroleum Reserve has fallen to 357.1 million barrels, its lowest level since January 2024, as the Trump administration drains emergency supplies to contain oil prices during the war with Iran.

The U.S. Strategic Petroleum Reserve dropped to 357.1 million barrels last week, the lowest since January 2024, as the Trump administration's emergency releases to cap crude prices during the Iran conflict drain stockpiles at a pace that risks breaching operational minimums.

"The SPR was irresponsibly depleted for many years prior to the Hormuz crisis and refilling it will also take many years and require congressional appropriations," Bob McNally, president of Rapidan Energy Group and a former White House energy adviser, said.

Commercial crude inventories fell by 7.97 million barrels in the week ended May 29, the Energy Information Administration reported Wednesday, far exceeding the 326,633-barrel draw analysts had expected. The SPR shed 8 million barrels in the same week, bringing total emergency stockpiles to 357.1 million barrels — 368 million barrels below maximum capacity. U.S. crude production edged up to 13.715 million barrels per day, up 314,000 bpd from a year earlier.

At the current drawdown rate, the reserve could approach its minimum operating level of 240 million barrels within months, raising questions about America's ability to respond to future supply shocks. The administration released about 172 million barrels from the SPR in March as part of a coordinated 400-million-barrel pledge by International Energy Agency members, structured as an exchange that requires returning more oil than was drawn down — a repayment that analysts said could eventually push prices higher.

The latest EIA data showed the scale of the drawdown accelerating. The 7.97-million-barrel decline in commercial crude stocks was more than double the roughly 4-million-barrel decline analysts in a Reuters poll had anticipated, reflecting both the SPR releases and strong refinery demand. Refinery utilization stood at 94.5 percent of capacity, with analysts estimating a further 0.3 percentage point increase in the week ended May 29.

Gasoline inventories rose by 3.45 million barrels last week after falling 3.2 million barrels the prior week, though stockpiles remain 6 percent below the five-year average for this time of year, EIA data showed. Distillate inventories, which include diesel and heating oil, fell by 214,000 barrels and are 11 percent below the five-year average.

A Reversal of Trump's Pledge to Refill

President Donald Trump had criticized his predecessor, Joe Biden, for draining the SPR by about 180 million barrels during the 2022 energy crisis sparked by Russia's invasion of Ukraine — the largest single drawdown in the reserve's 50-year history. Trump called that a "futile attempt to reduce oil and gasoline prices" and pledged during his January 2025 inauguration to bring emergency reserves "right to the top."

The war with Iran, which began Feb. 28, forced a reversal. The administration announced in March it would release about 172 million barrels over 120 days as part of a global push to lower energy prices, joining dozens of other IEA nations that collectively pledged 400 million barrels from their emergency reserves.

The Repayment Risk

The coordinated release was structured as an exchange, meaning the U.S. must return more oil to the SPR than was drawn down at a later date. McNally said this repayment could put upward pressure on prices, though the impact could be mitigated by doing so slowly.

Andy Lipow, president of Lipow Oil Associates, said the global releases had helped prevent crude from reaching $150 per barrel, as some had feared. But he warned the U.S. was "well on the way" toward the minimum operating level of 240 million barrels. Thomas Kloza, an oil market analyst, said that as the SPR falls below 300 million barrels, it could create problems with "the integrity of the oil stored."

Brent crude traded at $93.88 a barrel Wednesday, down 1.12 percent on the day, while West Texas Intermediate fell 1.12 percent to $92.13. The relative stability in prices suggests the SPR releases have achieved their immediate goal of capping crude's rally, though at the cost of depleting America's emergency buffer to levels not seen in decades.

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