Trump Administration Faces Critical Decision on Strategic Petroleum Reserve as Drawdown Nears Completion

Since the US-Iran conflict effectively closed the Strait of Hormuz in early 2026, cutting roughly 13 million barrels per day from global supply, the Trump administration has drawn down 66 million barrels from the Strategic Petroleum Reserve as of early June, with a total authorized release of 172 million barrels. The SPR, stored in approximately 60 underground salt caverns along the Gulf Coast of Texas and Louisiana, has fallen to around 340–350 million barrels—its lowest level since August 1983, surpassing even the record Biden-era drawdown that followed Russia's invasion of Ukraine. Rather than outright sales, the administration has structured at least 133 million barrels as swap contracts with major traders including Shell, Vitol, and Trafigura, who must return 1.25 barrels for every one taken, beginning early next year. Total US oil reserves including commercial stocks have hit their lowest level since 2004, and the key Cushing, Oklahoma hub holds just 21.6 million barrels—dangerously close to the roughly 20 million barrel operational minimum below which the distribution system effectively fails. Senior executives at ExxonMobil and Chevron have publicly warned that Brent crude could surge to $150–$160 per barrel once inventories reach critically low levels, with some analysts projecting prices could approach $200 per barrel and retail gasoline near $9 per gallon if the strait remains closed through year-end. The administration faces a difficult decision about whether to authorize further SPR releases, which some experts warn could backfire by signaling a loss of confidence in diplomatic efforts and pushing the reserve dangerously close to its legally mandated operational minimum of 150 million barrels.