First, let's get some important disclaimers out of the way. Neither Joseph nor I are any kind of experts on international energy markets, so anything we tell you is pretty much based on what we read in the papers.
When it comes to military questions, Joseph is actually pretty good, but, unfortunately, he's not the one writing this post. Nothing I have to say on that subject is backed by anything more than hopefully a little common sense and the articles cited. Reader beware.
Our sporadic thread on oil reserves is based mostly on two observations: first, that the news we've been seeing from reputable sources seems increasingly worrisome; and second, that the story doesn't seem to be getting anywhere near the attention that it should.
Spencer Kimball writing for CNBC:
The SPR fell by 6.1 million barrels to 298.7 million barrels last week, according to data released by the Department of Energy on Monday. The reserve, created in 1975, is at its lowest level since January 1983.
...
The SPR stood at around 415 million barrels before the U.S and Israel attacked Iran on Feb. 28. U.S. government stocks will fall to around 243 million barrels when the release Trump ordered is completed.
The SPR's operational capability is at risk due to aging infrastructure, according to a May report from the Government Accountability Office. More than a quarter of its inventory was "not available for drawdown due to a combination of construction outages and cavern outages" as of December 2025, GAO investigators found.
That implied that a minimum of 103 million barrels in the SPR today are not available for use, according to a July analysis by Rapidan Energy.
This is by no means an isolated phenomenon. As we previously discussed in our post about Cushing, Oklahoma, oil reserves, both public and private, are headed dangerously close to the tipping point.
With a few exceptions, numerous experts have observed that, after the initial reaction, the oil futures markets have tended to remain remarkably calm throughout the war, arguably to the point of denial. Part of this is credited to an increasingly questionable faith that things will resolve soon, but another component has been the steady release of oil from various reserves, which has softened the shocks considerably.
Assuming that when demand exceeds supply for an extended period of time, and assuming supply cannot be readily increased, we would expect prices to go up until demand once again matches supply. If we hit the tipping point before the end of the war, it seems like we should expect considerably more pain at the pump.
That is by no means the worst-case scenario. Between the Strait of Hormuz and the Red Sea/Suez Canal, a big chunk of the world's oil supply is being slowed or stopped, but not a majority. There are still a lot of potential targets for terrorist or cyberterrorist attacks, including other choke points, infrastructure, shipping, and storage facilities, not to mention the potential for supply shocks due to industrial accidents or natural disasters.
As I said at the beginning, I'm no expert, but this does not seem... good.
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