The U.S. Strategic Petroleum Reserve decreased by 3.1 million barrels last week, bringing the inventory down to 286.6 million barrels, the lowest level since November 1982.

According to the U.S. Department of Energy, the strategic reserve was still at 289.7 million barrels the previous week, with a continued decline of about 1.1% this week; compared to 403.4 million barrels a year ago, the current inventory has decreased by about 28.2%.

This ongoing release is part of a 172 million barrel release arrangement agreed upon between the U.S. and the International Energy Agency. If fully executed as planned, the strategic reserve could further drop to about 243 million barrels, nearing the levels seen in the early days of the reserve system.

The legal storage capacity of the U.S. Strategic Petroleum Reserve is 714 million barrels. With 286.6 million barrels currently, the fill rate is about 40%; Department of Energy data shows that the reserves are distributed across 61 storage caverns in the coastal salt dome systems of Louisiana and Texas.

A decrease in inventory does not mean that U.S. commercial crude oil inventories are at zero, nor does it mean that the U.S. has lost all oil supply on that day. The Strategic Petroleum Reserve is an emergency crude oil stockpile controlled by the federal government, separate from the commercial inventories held by refineries, traders, and businesses; its purpose is to increase crude oil supply to the market during wars, supply disruptions, or extreme price shocks.

In market mechanics, the U.S. government acts as the seller of the strategic stockpile, releasing crude oil to increase spot supply and suppress price shocks for gasoline, diesel, and crude oil; refiners, traders, and end fuel markets are the direct buyers. Short-term beneficiaries include the refining, transportation, and consumer sectors that rely on crude oil inputs; those under pressure are crude oil prices and the scarcity premium on inventories. Once inventories drop to around 40%, the buffer space available for the government to act during future supply shocks will shrink, increasing market sensitivity to Middle Eastern shipping, OPEC+ supply, and the pace of U.S. replenishment; if replenishment and release occur simultaneously, the marginal buyer will revert to the U.S. government.

Source: Public Information