The Trump administration plans to release 172 million barrels from the US emergency oil reserve as part of the coordinated effort by nations around the world to ease surging crude and fuel prices amid the Iran war.
The release, announced by Energy Secretary Chris Wright in a statement Wednesday, will take about 120 days to fully deliver the Energy Department's Strategic Petroleum Reserve. It's part of the plan by member nations of the International Energy Agency to discharge a total 400 million barrels from reserves globally.
“This is to tide the world over while these flows are restricted by Iran, but ultimately the United States military will prevail,” Wright said on Fox News. “Hopefully in the next few weeks we will start to see ship traffic returning to the Strait of Hormuz.”
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Crude, gasoline, diesel and jet fuel prices have climbed dramatically since the US and Israel began attacking Iran Feb. 28. The war has brought shipping traffic to a virtual standstill in the Strait of Hormuz, through which roughly one-fifth of the world's oil flows.
The Strategic Petroleum Reserve currently contains roughly 415 million barrels, about 60% of its capacity, following a series of drawdowns by the former Biden administration. Those included a record sale of 180 million barrels to help lower gasoline prices after Russia's 2022 invasion of Ukraine that drew criticism from Trump and other Republicans.
President Donald Trump has vowed to refill the reserve. It was created after the Arab oil embargo in the 1970s in salt caverns across the U.S. Gulf Coast. It has a maximum capacity of about 713.5 million barrels.
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Benchmark US crude futures rose as much as 4.1% after the announcement and are expected to extend gains given the gravity of the of global supply shocks emanating from the conflict.
The 400 million barrel release announced earlier by the International Energy Agency “is also official recognition that the Hormuz crisis has become serious enough for the industrialized world to liquidate one-third of its oil insurance policy,” ClearView Energy Partners said in a note Wednesday.
“It remains far from clear when the Strait might reopen; both naval mines and anti-ship weapons could still pose significant threats,” the Washington consulting firm wrote.
The release comes as Trump faces political pressure to address rising fuel prices. November's midterm elections will hinge in large part on Americans' attitudes toward affordability, and some polls show the public giving the president poor marks for his handling of the economy.
On paper, the reserve has the capacity to release about 4.4 million barrels a day, according to the Energy Department's website. It takes 13 days for oil from the system to reach the open market after the president orders a sale.
However, an analysis prepared by the Energy Department in 2016 said the actual amount the reserve is capable of releasing may be limited to 1.4 million to 2.1 million barrels a day. During the 2022 release that followed Russia's invasion of Ukraine, the amount never topped more than 1.1 million a day, according to an analysis of government data by ClearView.
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