The SPR Is Almost Empty: What a $28 Billion Refill Means for Oil Prices

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In 1973, Arab oil-exporting nations cut off the U.S…

Gas lines stretched around city blocks. Prices quadrupled. The American economy seized up in ways that took years to unwind.

Congress learned an obvious lesson from the ordeal…

The U.S. needed a strategic reserve of crude oil that it could tap in an emergency.

That way, no foreign government could hold the U.S. hostage at the pump again.

In 1975, Congress created the Strategic Petroleum Reserve (“SPR”). The oil reserves sit in salt caverns along the Gulf Coast of Texas and Louisiana.

At its peak in 2009, the SPR held 727 million barrels. That’s enough to cover roughly 150 days of net oil imports.

But we’re nowhere near the peak today…

Last week, the Department of Energy (“DOE”) said the SPR is now at 316.5 million barrels. That’s the lowest level since April 1983.

The buffer that Congress built is now less than half full…

From Ukraine to Iran: How Double Drawdowns Drained the SPR

This isn’t the first time the government has drawn down the SPR…

President Joe Biden released 180 million barrels in 2022 after Russia invaded Ukraine.

At the time, that was the largest single drawdown in the SPR’s history. And it pushed the reserves to multidecade lows.

The SPR had just started to recover when the current crisis hit…

On February 28, the U.S. and Israel began military action against Iran.

The conflict disrupted shipping flows through the Strait of Hormuz. Oil supply tightened globally.

On March 11, President Donald Trump’s administration said it would release 172 million barrels from the SPR. That was the U.S. share of a 400-million-barrel release by 32 nations in the International Energy Agency (“IEA”).

Since the announcement, the SPR has lost almost 99 million barrels. It dropped from 415 million barrels in early March to 316.5 million barrels by July 10.

U.S. crude inventories fell by 123.9 million barrels. They’re now at 730.8 million. That’s the lowest level since 1984.

The U.S. government structured the current release as an exchange – not a pure drawdown. Companies borrow from the SPR. Then, they must return between 18% and 28% more than they took.

As U.S. Energy Secretary Chris Wright said in March…

For every barrel we release, we’re going to get back more than 1.2 barrels of oil that will go back into the reserve next year.

That sounds like a good deal. But as of now, no clear timeline for replenishment has been set.

In May, the Government Accountability Office (“GAO”) released a report on the SPR. It found that Congress and the DOE don’t have a clear, long-term plan for the asset.

The Gulf Coast facilities are aging and behind on upkeep…

The 2022 drawdowns damaged some storage caverns. And the government never fully restored them.

The GAO also found that the SPR’s operational capability to meet future mission demands is at risk.

The Refill Trade: Where the Market Opportunities Lie

This story matters beyond energy policy…

It has direct implications for oil prices, energy stocks, and the broader market.

The “bullish” case for oil is straightforward…

The SPR release has kept oil prices in check during the Iran conflict. West Texas Intermediate (“WTI”) crude oil traded near $70 per barrel in early July.

When the release program ends, refilling will start. Then, the price ceiling will go away. The DOE will become a buyer – not a seller.

If the Iran issue isn’t resolved by then, prices could rise sharply.

The refill trade is where the longer-term upside sits…

Trump’s administration has committed to replenishing roughly 200 million barrels. At around $70 per barrel, restocking the SPR to 500 million barrels means we’ll need to add about 185 million barrels. That would cost roughly $13 billion at today’s prices.

The GAO’s facilities warning adds a layer most retail investors are missing…

The SPR has four Gulf Coast facilities – Bryan Mound, West Hackberry, Big Hill, and Bayou Choctaw. They need a lot of capital investment to operate at full capacity.

Companies that build and service the government’s energy efforts stand to gain going forward. The SPR needs years of upgrades before it can be fully refilled.

A National Security Mandate: Rebuilding America’s Energy Cushion

The SPR came out of what happens when the U.S. has no cushion against supply shocks…

The country learned that lesson in 1973. And it’s relearning a version of it in 2026.

A reserve of 316.5 million barrels is the lowest level in 43 years. And it has occurred during an active military conflict that’s disrupting global oil supply.

There’s no unified refill plan. And the GAO has pointed out aging infrastructure as a risk to future operations.

Wright says the exchange program will yield more oil than the government released.

That may be true.

But the return shipments won’t start until late 2026. And a lot can happen between now and then.

The gap between the SPR at full capacity and where it is today is roughly 400 million barrels. At $70 per barrel, that gap is worth $28 billion.

Filling it isn’t optional. It’s a national-security need. And filling it will move markets.

Good investing,

John Evelius

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