Conflicting signals from the US government over its intentions for one of the superpower’s main energy assets have been reverberating around oil markets and are raising more questions than answers over the Biden White House’s intentions for the Strategic Petroleum Reserve.
This nationally and internationally significant stockpile has been part of the picture in world energy markets since it began in the 1970s.
It was established as a means for continuity of fuel supply in an emergency or at times of crisis brought about by high prices, in a country long dependent on oil imports for fuel. It has been seen ever since as a matter of national energy security, a tool to protect against turmoil in the international markets.
And so, the SPR has political importance as the US’s insurance policy against the interruption of fuel supply, with gasoline the lifeblood of the world’s biggest economy. The SPR’s profile was perhaps at its height when it was young and famed as a potential economic lifeline.
A 40-year low
Now, the SPR is back under scrutiny – hitting a 40-year low – and the White House’s stated intentions for it are, at times, unclear or unfulfilled.
With energy markets and politicians alike keeping watch on what is going on with the SPR – and why – Al Majalla looks at what is happening with this complex asset, and what is driving the political and economic patterns in play around it.
Since President Joe Biden took office, some 266 million barrels of crude oil have been withdrawn from the SPR stockpiles that previous administrations – both Democratic and Republican – built up.
This massive drawdown means the current administration is holding the SPR at its lowest level since 1984. It is currently at around 372mn barrels — almost half the all-time high of 727mn barrels reached in 2010.