The United States is about to release over a hundred million barrels from its oil reserves, reportedly with the first batch of 45 million barrels.
As ongoing conflict in the Middle East continues to drive up energy prices, the United States has begun tapping into its Strategic Petroleum Reserve (SPR).
On Friday, June 20th, after the US stock market closed, media cited sources saying that the US government plans to release approximately 45 million barrels of crude oil from the SPR in the first phase, aimed at curbing rising fuel prices.
This action is the "opening move" of an emergency release plan totaling 172 million barrels from the SPR and is part of the global oil reserve release plan announced last Friday by the International Energy Agency (IEA). Against the backdrop of supply disruptions and heightened geopolitical risks, the market is closely evaluating: large-scale use of strategic reserves—whether it is merely a "short-term painkiller" or a key variable that will change oil price trends.
Based on Friday's announcement, the first batch released by the US accounts for about 26% of its total planned oil reserve release.
Last Friday, the IEA announced that its 32 member states had agreed to release a combined 400 million barrels of strategic oil reserves. This is the largest collective release action in IEA history. Following the Russia-Ukraine conflict in 2022, IEA member states released a cumulative 183 million barrels over two occasions; this time, the scale has directly doubled.
Later last Friday, the US Department of Energy confirmed that as part of the global action coordinated by the IEA, the US plans to release 172 million barrels of SPR in response to the oil price spike caused by US and Israeli airstrikes on Iran. At the planned release pace, the US release process is expected to last about 120 days.
Wallstreetcn later pointed out that the US oil reserve release suffers from severe delays. After the President issues the release order, the Department of Energy needs about 13 days to tender, award contracts, and begin delivery. After that, crude oil must be transported by pipeline or tanker to refineries and end-use destinations. Even with immediate action, oil reserves will not actually hit the market until at least the end of March.
The release of 172 million barrels from the SPR is one of the largest policy interventions by the US government in recent years. It's worth noting that this round of releases is not a simple "sale," but more akin to a "borrowing mechanism" (exchange): companies receiving the crude oil must return it in the future, possibly with interest. This means the policy aims not only to suppress prices in the short term, but also to manage medium- to long-term inventory.
From historical experience and market structure, releasing oil reserves has a clear "timeliness" and "structural" impact on oil prices.
- Short-term: Eases spot tightness, lowers near-month prices
Media reports indicate that traders have begun selling near-term crude contracts and buying longer-term futures, reflecting that the oil reserve release will increase short-term supply, but there will still be replenishment pressure in the future.
This means spot prices may fall, and the futures curve will trend toward "higher prices for later months."
- Mid-term: Price support remains, geopolitical risks dominate
Similar to the Russia-Ukraine conflict in 2022, reserve releases can generally only offset "part of the supply gap," and are unlikely to reverse the trend.
The current situation is more complex: Middle East supply disruptions are larger; risks in transport routes like the Strait of Hormuz persist; and energy facilities themselves have become targets.
Therefore, even with the release of 172 million barrels, the market may still remain highly volatile.
- Long-term: Inventory pressure and limited policy space
The Strategic Petroleum Reserve is essentially a "safety cushion." The total US SPR capacity is about 700 million barrels, but it has been tapped multiple times in recent years, leaving inventory at historically low levels.
Wallstreetcn mentioned this week that after the release of 172 million barrels, the total US SPR inventory will fall to 244 million barrels, significantly below the statutory red line of 252 million barrels. In addition, the salt cavern engineering structure requires at least 150–160 million barrels of minimum safe reserve, so even if the statutory red line is breached, there is less than 90 million barrels left for further release.
In summary, continued releases will weaken the ability to respond to future crises, the "marginal effectiveness" of policy tools will decrease, and replenishment at higher prices will increase fiscal costs.
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