The United States is the world's largest oil producer, but its market influence goes further than production. Companies, large and small, operate under the laws of the market and make production and reversal decisions based on these dynamics. To manage price volatility and ensure economic stability, the United States maintains a Reserva Estratégica de Petróleo (SPR).
The SPR function
Founded in 1975 after the 1973 oil crisis, the SPR was created to protect the state economy in the event of significant disruptions in global oil governance. This reserve accumulates in underground caves on the coast of the Gulf of Mexico, mainly in Louisiana and Texas, and is the world's largest emergency oil reserve.
Buy recently
With crude oil prices currently hovering around $70 per barrel, the Energy Department reported on the purchase of 6 million barrels for SPR, with prices exceeding 20% since July. These purchases include 3.5 million barrels from Exxon Mobil, 2 million from Shell Trading Company and 500,000 from Macquarie Commodities Trading US, for a total of more than $411 million.
Recovery strategies
After last year, SPR entered a cleanup process after President Joe Biden authorized the release of 180 million barrels to control fuel prices following Russia's invasion of Ukraine. The crude oil purchase will proceed at a rate of 1.5 million barrels from February to May 2025.
However, the actual assumption only allows for the purchase of 2 million additional barrels up to a maximum of 75 dollars per barrel. To continue with the recovery, the Departamento de Energía will need more funding from Congress.
History of the SPR
Throughout its history, the SPR has been used on various critical occasions, including:
- Gulf War (1991): Released oil to stabilize prices during Iraq's invasion of Kuwait.
- Huracán Katrina (2005): More than 11 million barrels are released to mitigate the impact on energy supplies.
- COVID-19 Pandemic (2020): If you buy large quantities when the prices are at their lowest historical price.
- Russia-Ukraine War (2022): The largest release of reserves in history, with 180 million barrels, to counter price volatility.
The US Strategic Petroleum Reserve not only functions as a faucet before energy crises, but also reflects the country's strategic decisions in the complex global oil market. As prices continue to fluctuate, managing and replenishing this reserve will be critical to the nation's future energy security.
