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U.S. crude oil supplies are at a 45-year low as the Iran war continues to tarnish strategic reserves.
Bank of America Global Research data shows that the level of the U.S. Strategic Petroleum Reserve is at its lowest level since 1983, leaving the country with 43 days of crude oil supply, as reported by the Associated Press.
The Trump administration is releasing oil from the reserves to combat rising energy costs sparked by the closure of the Strait of Hormuz, which carries up to a fifth of the world’s oil transports per day.
Throughout five months of conflict, the strait has been effectively shut off to commercial traffic, rattling global energy markets and promoting instability for the price of crude oil.
In response, President Trump committed to a domestic drawdown of 172 million barrels over a 120-day delivery window.
Roughly 108.6 million barrels of crude oil have been released to date, while current inventory levels sit at approximately 304.8 million, according to federal data.
In June, however, the president warned against relying on strategic reserves to keep the country afloat during war.
“We run out of reserves in about four weeks,” Trump told reporters on June 17. “We would really run out and there’ll be a time when you wouldn’t be able to get it. And do you want to see bedlam?”
The same day, Trump signed a memorandum of understanding with Iran in an effort to move towards peace in the region.
The agreement intended to provide a pathway to Iran’s denuclearization and vessels’ safe transit through the Strait of Hormuz for an extended ceasefire, but the deal was short-lived and strikes resumed on July 8.
Crude oil prices surged nearly 5 percent on July 8, and Brent crude rose 5.2 percent, settling at $78.02 a barrel. West Texas Intermediate (WTI) crude climbed 4.4 percent to $73.52 a barrel.
South Korea, Thailand, Vietnam and Bangladesh instituted emergency energy rationing and conservation policies such as restricted AC usage or alternate-day driving rules to cope with the fallout.
China reduced its oil imports from the previous year by roughly 3.5 million barrels per day (BPD), dropping imports from an average of 11 million BPD down to about 7.8 million BPD.
The country has the world’s largest emergency crude oil inventory system, estimated to total nearly 1.4 billion barrels when combining state-managed and commercial-social stockpiles.
The U.S. has not done much to adapt to the fluctuating oil market as Trump and his officials have remained largely optimistic about prices returning to normal as soon as the war ends, despite not having a set timeline for withdrawal.
The president has hammered American companies like ExxonMobil and Chevron for making significant profit off the war through drilling efforts typically encouraged by his administration.
“They’re making too much money. Too much money,” Trump said on Monday, urging them to decrease prices at the pump.
“You’re surprised? I’m saying it. I’ll say it loud and clear,” the president added.
Despite his comments, major oil producers do not control most individual station prices and executives warn that global crude realities driven by the war with Iran will keep retail prices elevated.
Even when global crude benchmarks fluctuate or dip, retail prices at local stations historically lag behind by weeks.
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