The United States is increasingly vulnerable to a sharp oil price shock as the ongoing conflict with Iran drives up global energy prices, with analysts warning that the country’s depleted Strategic Petroleum Reserve (SPR) limits Washington’s ability to stabilise the market, according to a Financial Times (FT) report.
The Strategic Petroleum Reserve, established in 1974 following the Arab oil embargo, currently holds far less oil than its capacity after large withdrawals in recent years and the failure to replenish it despite earlier promises.
According to the report, the reserve currently contains about 415 million barrels of oil, equivalent to roughly 20 days of total US consumption, significantly below its 714 million-barrel capacity.
The stockpile was heavily drawn down after former US President Joe Biden authorised the release of 180 million barrels beginning in 2021 to help contain surging fuel prices following Russia’s invasion of Ukraine.
However, current US President Donald Trump has not followed through on a pledge made during his inauguration speech last year to “refill our reserves right up to the top again", the report claimed.
Energy analysts told the publication that the failure to replenish the reserve when oil prices were lower has left the US with fewer tools to respond to the current surge in prices.
“The problem now is that if we see a prolonged period of supply constrictions," Hugh Daigle, a petroleum engineering professor at the University of Texas at Austin, was quoted as saying.
He said the administration had missed an opportunity last year to refill the reserve when crude prices were cheaper.
Any disruption to the Strait of Hormuz, a chokepoint through which about one-fifth of global oil supply passes, would make replenishing the SPR even more difficult, he added.
“That’ll lead to higher prices, which would make it financially more difficult to refill the reserve," Daigle was quoted as saying.
Source: World News in news18.com, World Latest News, World News
