The US is draining its strategic oil reserves at an unprecedented rate to stabilize global markets, but the move creates a ticking clock before inventories hit critical lows.
The US is draining its strategic oil reserves at an unprecedented rate to stabilize global markets, but the move creates a ticking clock before inventories hit critical lows.

(Bloomberg) -- The US has pushed its net exports of crude and refined products to a record 5.9 million barrels a day, acting as a supplier of last resort to a global market reeling from the near-closure of the Strait of Hormuz. The move, driven by an unprecedented release from the nation’s Strategic Petroleum Reserve, is putting downward pressure on prices but rapidly depleting the world’s buffer against future shocks.
“Inventories are acting as the shock absorber of the global oil system,” said Natasha Kaneva, JPMorgan Chase & Co.’s head of global commodities research. But “not every barrel can be drawn,” she warned, pointing to the operational minimums required to keep the energy infrastructure functioning.
Over the past four weeks, the US has released more than 1.23 million barrels a day from its SPR, a record high that accounts for nearly half of the country’s 2.6 million barrel-a-day increase in net exports compared to a year ago. This has helped cut the delivered cost of WTI crude into Europe from nearly $160 a barrel to $106. The surge in US supply, however, comes as global oil stockpiles dropped by an estimated 4.8 million barrels a day between March and late April, according to Morgan Stanley.
The aggressive drawdown leaves the Trump administration with a narrowing window to manage the crisis. While the authorized release of 172 million barrels can sustain the current pace for several more months, it will leave the SPR at its lowest level since the early 1980s. Analysts warn that once the releases stop, the market will face the double pressure of lost supply and the need for governments and companies to replenish their dangerously low inventories.
The risk of shortages is becoming acute in several fuel-import-reliant nations. Traders point to Indonesia, Vietnam, Pakistan, and the Philippines as being at risk of hitting critical supply levels in as little as a month.
“Top of my mind in terms of places facing imminent shortage is gasoline in Asia, with countries like Pakistan, Indonesia or the Philippines likely to be the first to face issues with tank bottoms,” said Frederic Lasserre, head of research at energy trader Gunvor Group.
The pressure is also building in developed economies. European jet-fuel stocks are depleting just as the summer travel season begins, with some analysts predicting critical levels as soon as June. In the US, the source of the emergency supply, domestic distillate stockpiles have fallen to their lowest point since 2005, and gasoline inventories are near their lowest seasonal levels since 2014. JPMorgan’s Kaneva warns that inventories in OECD countries could reach “operational stress levels” next month and hit bare-minimum floors by September if the strait remains closed.
Even as the US export surge provides temporary relief, the long-term outlook is precarious. The conflict has already removed roughly 900 million barrels from the global market, and even if the Strait of Hormuz reopens, production and shipping are unlikely to normalize quickly.
“A lot of the inventory and spare capacity has been depleted already,” Chevron Corp. Chief Financial Officer Eimear Bonner told Bloomberg TV. “We are going to start to see some import-dependent countries potentially start to face critical shortages as we get into the June-July time-frame.”
The situation has created a political liability for the Trump administration, which is facing criticism for soaring domestic gasoline prices in an election year, particularly in Midwestern states like Ohio where prices have surged 72%. While the White House has few levers left to pull, the current strategy of draining the SPR is seen as having a limited shelf life before market anxiety over long-term supply sustainability returns, potentially sending prices sharply higher.
This article is for informational purposes only and does not constitute investment advice.