U.S. strategic oil reserve at lowest level since 1984

The U.S. strategic petroleum reserve fell to 434.1 million barrels, its lowest level since 1984, the Department of Energy reported. This is a decrease of 160 million barrels in just one year (27%).

The aim of this measure was to help contain the price of oil, which had been rising even before the war in Ukraine. After the conflict broke out and the cost of gas skyrocketed, the executive decided to sell one million barrels per day from the reserve to the highest bidder for six months. At first, this initiative would be terminated in October, although Secretary of State Jennifer Granholm told Reuters that the administration will evaluate whether exports will continue when the time comes.

Pending Russia and OPEC

The decision will depend, to a large extent, on the steps taken by Russia and OPEC in the coming days. For the time being, the Kremlin and the energy cartel have announced that from next October they will reduce oil supplies to Europe due to the economic outlook of global recession. A flow that Moscow has already begun to slow down significantly as a result of international sanctions. In addition, its gas shipments to the old continent are currently paralyzed.

Against this international backdrop, Granholm must take U.S. security into account, which makes the final decision even more complicated. The Secretary of Energy sent a letter to domestic refineries urging them to replenish current low reserves in preparation for winter and to reduce exports of diesel and gasoline. The letter warns that the Administration could take action if reserves continue to decline.

Inflationary tension

On the other hand, the allies continue discussions on the possibility of capping Russian oil prices, which could increase cost pressures with inflation soaring. Granholm acknowledged that there is a possibility of banning crude oil exports, although she hastened to stress that it is not one of the Executive's first options.

The strategic reserve was created to ensure the supply of fuel to the Americans in the event of a major war, but this has blown up with Biden's initiative. China, one of the main adversaries of the US at the moment, is one of the countries that has obtained the most oil from this source. Hunter Biden' s business dealings could be behind this.