While SPR inventories are at their lowest absolute levels in over three decades, the stockpile is very well-placed to meet its mission, which is to “reduce the impact of disruptions in supplies of petroleum products and to carry out obligations of the United States under the international energy program.” That’s because while the SPR’s crude oil inventory levels have fallen, US import needs have receded, even as US exports have surged. Accordingly, US net crude oil imports stand at just over two million barrels per day, down sharply from ten million barrels per day in 2007, or eight million barrels per day in 2017.
The rise in US crude exports and the drop in net imports have bolstered US oil security. However, challenges remain. US refineries are optimized for specific crude grades, many of which still need to be imported. Shifting light, sweet crude exports to domestic use could, for example, disrupt refineries optimized for heavier, more sulfuric crude grades.
Despite these limitations, SPR inventories are at elevated levels, allowing the United States to cover about 23.3 weeks of demand. Net crude oil import cover is sharply higher than before the shale boom, or even immediately before the COVID-19 pandemic.
Finally, US crude oil production is projected to increase by more than domestic petroleum products demand again in 2025. Technological improvements and—critically—the removal of energy infrastructure bottlenecks are supporting domestic crude production. The recently inaugurated Matterhorn Express natural gas pipeline, which runs west-to-east across Texas, will remove an important takeaway constraint from the Permian Basin, improving US oil production fundamentals and sending domestic output higher. Finally, US petroleum products consumption in 2025 is expected to increase only slightly, as domestic gasoline consumption may have peaked already. Accordingly, the US Energy Information Administration’s October Short-Term Energy Outlook projects US net crude oil imports will decline to 1.46 million barrels per day in 2025, enabling the United States to draw down inventories even further while still maintaining net import coverage.
In the coming weeks, the unfolding Middle East crisis could dominate oil markets. A significant escalation between Israel and Iran could spike oil prices. Despite uncertainties, US policymakers have ample SPR reserves and should use them if disruptions occur.
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