US oil stockpile is at a three-decade low

The U.S. plans to release 172 million barrels from the Strategic Petroleum Reserve (SPR), about 40% of its current stock of 415 million barrels. This move comes as global oil supplies are threatened, particularly with Iran shutting down the Strait of Hormuz.

The coordinated release, part of a broader plan among 32 countries to manage price spikes, aims to provide temporary market reassurance. However, it won’t fully offset potential losses from Hormuz's shutdown.

While the U.S. is the largest oil producer, replenishing the SPR poses logistical challenges. A fully funded effort could take until 2031 to restore the reserve. The SPR was established during the 1973 oil embargo, and previous emergency releases occurred during significant crises.

The release is intended to stabilize prices psychologically, even if it doesn't solve supply issues. "The credible threat of coordinated action is doing more heavy lifting than the actual barrels ever could," noted Mark Malek, chief investment officer at Siebert.