The safety net keeping oil prices from spiking is nearly gone, and one analyst warns that when it runs out, the move could be sudden and severe.
“Crude oil is fast losing its strategic petroleum reserve buffer, and a violent repricing up cannot be discounted until the market sees toned-down rhetoric from both parties,” said June Goh, an analyst at Sparta Commodities. Her warning lands as the U.S. Strategic Petroleum Reserve drops toward a Reagan-era low, right as geopolitical risk around the Strait of Hormuz sits at its highest in years.
A Cushion Draining Toward 1983 Levels
The SPR hit a three-year low of 349.2 million barrels on June 5, 2026, and by July 3 was reported at around 319.5 million barrels. That already surpasses the prior low of 346.7 million barrels set in July 2023 during the Biden administration. Fall much further and the reserve reaches a level not seen since August 1983, when Ronald Reagan was in the White House.
The pace concerns analysts. Since the Iran conflict began, the Trump administration has drained more than 66 million barrels from the reserve as of June 5, and is authorized to release up to 172 million barrels in total. In one week alone, a record 9.92 million barrels were pulled, according to Fortune’s Jordan Blum. This represents rapid emptying of a stockpile meant for genuine emergencies.
Why the Reserve Is Emptying Now
With the Strait of Hormuz effectively closed, straining global oil flows, the administration has leaned on the SPR to keep U.S. exports moving and cap domestic gasoline prices. Pump prices have stayed contained, $3.85 per gallon as of July 13, even after WTI briefly touched $114.58 per barrel in April. But every barrel released is one less cushion for the next shock.
Patrick De Haan, head of petroleum analysis at GasBuddy, underscored how unusual the moment is. “It’s a pretty monumental number to hear multidecade lows reached,” he said. “The longer this goes on the fewer tools the administration has in dealing with it and the more risk there is to a slingshot for costs.”
The “Danger Zone” and Where Prices Could Go
UBS has warned of a crude “danger zone” as SPR buffers disappear. On price, Eurasia Group sees oil rising toward $95 a barrel, and TD Securities says $100 a barrel is plausible if physical shortages become obvious. These are scenarios that become more likely as the buffer thins.
The SPR was created after the 1970s Arab oil embargo and peaked at 726.6 million barrels in December 2009. Today, at around 319.5 million barrels, it holds a fraction of that. China now sits on the world’s largest reserve, roughly 1.4 billion barrels, more than four times the current U.S. stockpile.
Energy Equities Have Already Moved
Investors positioned for supply tightness have been rewarded. Exxon Mobil (NYSE:XOM | XOM Price Prediction) is up 24.1% year to date, Chevron (NYSE:CVX) has climbed 25.28%, and the Energy Select Sector SPDR Fund (NYSEARCA:XLE), where Exxon and Chevron together represent roughly 41% of holdings, is up 30.77%. Both majors flagged Middle East disruptions as material headwinds in their Q1 filings.
A Risk That’s Building
The framing is one of elevated risk. Goh tied the “violent repricing” scenario to the absence of toned-down rhetoric, meaning diplomacy could defuse it. This is danger accumulating quietly. The SPR has been doing heavy lifting to keep gas prices calm through a Middle East conflict. Now it is running low, at the same moment the risks it exists to offset are running high. Whether the market lands softly or violently may come down to what happens next in the Strait of Hormuz.
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