Iran war has left Strategic Petroleum Reserve even less full than before

As a presidential candidate in 2024, Donald Trump pledged to immediately fill the Strategic Petroleum Reserve, an extensive network of caverns in Louisiana and Texas that stores crude oil that the United States can use in the event of a global oil shock.

Since we last checked in on this promise more than a year ago, the level of oil stored in has gone one direction: down.

The reserve, which dates back to OPEC’s 1973 and 1974 oil embargo, has the capacity to store more than 700 million barrels of crude oil in underground geological formations known as salt domes. 

Both Trump and former President Joe Biden released oil from the reserve — Biden amid a gasoline price shock after Russia invaded Ukraine and Trump after the U.S. attacked Iran and Iran retaliated by squeezing oil traffic through the Strait of Hormuz.

The amount of oil in the reserve came up during the early days of Trump’s second term. But its level today is its lowest since the early 1980s, about 26% lower than before he took office. 

On Aug. 31, Trump reiterated his goal to refill the reserve “fairly quickly” and said an agreement with Venezuela would help that along. 

The agreement would give the U.S. government a 35% ownership stake in a partnership with a Venezuelan businessman who has 100-year rights to 17 Venezuelan oil fields with 65 billion barrels of proven reserves. The U.S. would have the guaranteed right to buy 20% of the oil produced without a price markup.

Using this oil to refill the reserve is easier said than done. It would be predicated on massive investments to upgrade Venezuela’s crumbling oil infrastructure. It also would require oil companies to take the risky step of agreeing to operate long-term in a country that has previously seized the operations of private, foreign companies.

In addition, the oil produced under the U.S.-Venezuelan partnership wouldn’t be able to go directly into the reserve.

Crude oil is graded by its weight and its “sweetness,” a measure of the oil’s sulfur content. Most U.S.-produced oil is “light” and “sweet,” while Venezuela produces “heavy” and “sour” crude with a thick, tarry viscosity.

“Because of its heavy nature, (Venezuelan crude) isn’t well-suited for storage in the Strategic Petroleum Reserve,” said Skip York, a fellow at Rice University’s Center for Energy Studies. “It would strain the pumping system.” 

It also can’t be mixed with the light, sweet crude already stored in the reserve.

One solution would be to sell Venezuela’s heavy crude on the world market and use the proceeds to purchase lighter crude that can be stored in the reserve, said Severin Borenstein, a University of California-Berkeley business administration and public policy professor.

“The supply from these fields is generally years away, and we probably need to take action to refill the reserve before then,” Borenstein said.

Trump’s promise to immediately fill the reserve is far from his goal. The current level is at near-record lows after Trump launched a war against Iran. In other words, his administration’s actions have made it harder to fulfill his promise. We rate this promise Stalled.