U.S. government: seeking to borrow up to 92.5 million barrels of crude oil from the Strategic Petroleum Reserve

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The Trump administration announced on Thursday local time that it is seeking to lend up to 92.5 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) to energy companies, aiming to stabilize soaring oil prices caused by the Iran war.

In March this year, the U.S. agreed to lend 172 million barrels from the SPR as part of a broader agreement reached with more than 30 member countries of the International Energy Agency (IEA)—countries will collectively release about 400 million barrels of reserves to ease market pressure. IEA Director Fatih Birol stated that this war has resulted in the most severe disruption to oil supply in history.

The U.S. Strategic Petroleum Reserve is stored in four salt caverns along the coast of Texas and Louisiana, with current inventory near 398 million barrels, roughly equivalent to four days of global oil consumption. Oil released from the SPR operates in a "lending" manner. Oil companies must return the barrels later with an extra premium. The U.S. Department of Energy stated that this mechanism will help stabilize the market and will not impose any burden on taxpayers.

Prior to Thursday, the U.S. had already provided 126 million barrels of crude oil to the market in three batches, but oil companies actually subscribed for less than 80 million barrels, accounting for about 63% of the supply. If the newly added supply is fully subscribed by oil companies, the U.S. will achieve its target of lending 172 million barrels.

Currently, persistently high oil prices pose a risk to the performance of Trump’s Republican Party in this year’s November midterm elections.

However, even though countries have used their reserves, oil prices remain elevated. On Thursday, global oil prices briefly touched a four-year high above $126 per barrel, due to market concerns that the Iran war may trigger prolonged supply disruptions in the Middle East.

On Thursday, WTI June crude oil futures closed at $105.07 per barrel, with a cumulative gain of over 12.78% in April. Brent June crude oil futures closed at $114.01 per barrel, with a cumulative gain of over 9.56% in April. On April 30, during the Asia-Pacific midday session, Brent reached $126.41.

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