U.S. crude oil inventories are rapidly declining as tensions between the United States and Iran escalate.
According to the Financial Times, as of July 24, commercial crude oil stocks in the U.S. fell by 7.2 million barrels, while strategic petroleum reserves (SPR) decreased by 3.8 million barrels. This brings the SPR down to 307 million barrels, the lowest level since March 1983.
The increase in refinery production, driven by soaring fuel prices, has contributed to this decline. The U.S. government reported that refinery utilization rates reached 97% this week, with some regions in the Midwest hitting 100%.
As tanker operations through the Strait of Hormuz face restrictions, U.S. oil companies are ramping up exports to meet demand in Asia and Europe. This has raised concerns about the U.S.'s ability to continue acting as the 'ultimate supplier' in the global oil market.
Matt Smith, an analyst at energy research firm Kpler, noted, "U.S. commercial crude oil and strategic petroleum reserve stocks have decreased by about 20% since early April. Over the past four months, the U.S. has absorbed approximately 70% of the global decline in onshore crude oil stocks."
He added, "While the U.S. has shouldered the burden of price suppression through the release of strategic reserves and increased exports, this pace of inventory depletion cannot continue indefinitely."
Lori Johnston, founder of Commodity Context, described U.S. crude oil and gasoline inventories as being at a "dangerously low level."
The market estimates the operational lower limit for the strategic petroleum reserve to be between 180 million and 200 million barrels. If stocks fall to this level, further releases could damage storage facilities or disrupt pipeline operations.
The Financial Times highlighted that the rapid decline in oil inventories is making the U.S. increasingly vulnerable to future supply shocks.
* This article has been translated by AI.
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