US emergency oil reserve hits 1982 low as Hormuz risks keep crude elevated

Vijay Valecha, Wed, Aug 19, 2026 Gulf Business

America’s emergency oil stockpile has fallen to its lowest level in nearly 44 years, leaving Washington with a sharply thinner buffer as the Iran conflict and disruption in the Strait of Hormuz keep oil prices elevated.

Stocks in the US Strategic Petroleum Reserve (SPR) dropped by about 5.3mn barrels in the week ending August 14 to 293.4mn barrels, according to Department of Energy data, the lowest level since December 1982.

The 293.4mn-barrel level remained the latest official reading available on Wednesday, August 19, ahead of the US Energy Information Administration’s latest weekly petroleum report due later in the day.

The decline marks a dramatic reversal from earlier this year. The reserve held 415.4mn barrels on March 20, meaning stocks have fallen by roughly 122mn barrels, or about 29 per cent, since then.

Washington authorised the release of 172mn barrels from the SPR in March as part of a wider International Energy Agency (IEA) initiative to make 400mn barrels of oil and refined products available from emergency reserves following severe disruption to global energy supplies.

The 122mn-barrel reduction in SPR holdings since March 20 is equivalent to around 71 per cent of the volume authorised for release, although the change in overall inventories should not be read as a direct measure of how much of the programme has been delivered.

At its latest level, the SPR holds the equivalent of about 41 per cent of its 714mn-barrel authorised storage capacity.

Much of the emergency programme has been structured through exchanges, under which energy companies borrow crude from the reserve and return barrels at a later date, along with additional oil as a premium.

Vijay Valecha, chief investment officer at Century Financial, said on Tuesday that crude prices were continuing to receive support from signs that the confrontation between Washington and Tehran could persist.

“From a fundamental standpoint, WTI has been grinding their way higher in recent sessions, as the US signals that the showdown with Iran is set to run,” Valecha said.

“The two sides remain far apart on a host of issues, including Hormuz.”

However, Valecha said WTI was approaching an important technical resistance level around $87 a barrel.

“On the 4-hour timeframe, a clear bearish RSI divergence is also visible,” he said.

Valecha said a failure to break through $87 could open the way for WTI to retreat towards $80, while a sustained move above that level could push the benchmark towards $90.

“However, a break above $87 can target $90,” he said.

The EIA, meanwhile, expects Brent to average around $85 a barrel during the third quarter, before easing to approximately $78 in the fourth quarter as traffic through Hormuz increases and disrupted production starts returning.

It forecasts Brent averaging $69 a barrel in 2027.

The agency nevertheless expects global oil inventories to decline by an average of 3.8mn barrels per day in the third quarter, highlighting the continuing uncertainty surrounding Middle East supplies.

Gulf Business