5 ms·

US oil inventories fall to 'precariously low' level as Iran war disrupts supply

71 points by mapping365 2mo ago

JumpCrisscross 2mo ago
> The US government is continuing to release oil from its strategic petroleum reserve, which saw a drawdown of 3.8mn barrels to 307.7mn barrels — the lowest level in more than 40 years. Its operational minimum, below which further withdrawals risk damaging infrastructure and disrupting pipeline operations, is estimated at 180mn to 200mn barrels, according to industry analysts. So [EDIT: half] a year of reserves left at current rates and levels.
- mapping365 2mo ago
  No, less than a year, much less. There needs to be a certain level maintained in order to keep pressure and lot of the bottom stuff is unusable because of contaminants - it's like sludge.
  - JumpCrisscross 2mo ago
    > There needs to be a certain level maintained Isn't that the "180mn to 200mn barrels"?
    - vel0city 2mo ago
      ~300 - 200 = 100mn useful barrels. If we're drawing it down by about 4 a week, that's about 25 weeks. If it's really closer to the 180 needed to prevent collapse and hit unusable supply then it's 120mn barrels and we're at 30 weeks. A year is 52 weeks. That also is based on a massive assumption of constant draw rate. Something is probably going to change, who knows when. Maybe the war ends and things actually reopen soon. Maybe Iran manages to blow up Saudi pipelines avoiding the straight. Maybe China's SPR runs out (nobody knows what it's at) and international demand skyrockets again. Other reserves are likely to be eliminated soon as well, putting more international pressure. I wouldn't have a clue what the rate will be in a month or two, but I can't imagine it'll be anywhere near the same as the past few weeks.
      - JumpCrisscross 2mo ago
        Oh yeah, I fucked up my math. Thanks.
      - whatisthiseven 2mo ago
        Regardless of usage patterns, oil simply can't go above a certain price or a chunk of the northeast dies in winter. This war is the largest self inflicted wound to the US in history. And Trump is pretending like all is fine because he keeps, erroneously, believing the oil problem he caused will resolve itself. Of course the next (Dem) president will be blamed for low oil reserves and high prices to refill it.
    - mapping365 2mo ago
      From what I understand, below 300 you start having issues, there's also a minimum national security level at 250 (not legally binding).
      - JumpCrisscross 2mo ago
        > below 300 you start having issues Source?
        mapping365 2mo ago
        I'll try to find it again, it was in a Bloomberg podcast about energy.
    - Computer0 2mo ago
      This is unfamiliar territory, and honestly it's still an assumption. No one is sure at what level the system needs to remain stable.
- deleted 2mo ago
  [deleted]
- sudosysgen 2mo ago
  As the private/working reserves are set to reach operational minimums in a month or less at the current pace, the SPR will have to increase draw rate or there will have to be further demand destruction. If it goes to 7mn a week, below the 9.9mn peak draw recorded, that's 4.5 months. If it has to exceed peak rates as private/working reserves running out bites more than the optimistic numbers I'm using, or if China returns closer to pre-war oil imports, it will run out in 2-3 months. Before it runs out, the maximum draw rate will likely start falling - there are multiple facilities and some are already at or close to operational minimums - which will force demand destruction even before operational minimums. The operational minimums for commercial crude inventories are estimated at 300-380mn barrels, with current inventories at . Weekly draw rate this week was 7.2mn just for the commercial inventories, and levels were ~400mn barrels. So there's 20-100mn barrels remaining in the commercial inventory. Even moreso than the SPR, this is uneven, and maximum draw rates will decrease as individual storage reaches minimums.
  - 0cf8612b2e1e 2mo ago
    Other countries have also been tapping into their own strategic reserves. When those run dry, that will put more pressure on any remaining sources. I am struggling to find updates on European reserve levels, but they must look similarly dire at this point.
- Ancalagon 2mo ago
  Literally the dumbest president of all time.
mullingitover 2mo ago
The fun part of this is the crack spread doesn't care about the relatively low price that crude is selling for. Refined petroleum is going for eye-watering prices, and will continue to do so for a very long time, even if peace breaks out tomorrow. Also seems pretty doubtful that oil prices would drop even if the war ended, given that everyone is going to be scrambling to refill their reserves for a very long time. On top of that, a lot of wells have been capped, which is a destructive act, so it'll take years to repair the supply. The real winners will be everyone who destroyed their own oil demand. I went out and bought an EV in May to replace an ICE vehicle, and the other car in the household hasn't burned through a full tank in the months since. They may have killed the EV subsidies in the US but they just went out and created a huge regressive tax on everyone not driving an EV.
- gib444 2mo ago
  Will the tradespeople (contractor) crowd turn up in this thread and cheer on the oil companies for making good money, damn any effect on the rest of the economy? ;)
  - JumpCrisscross 2mo ago
    > Will the tradespeople (contractor) crowd turn up in this thread and cheer on the oil companies for making good money Huh?
    - cucumber3732842 2mo ago
      There was a thread about data-centers hiring trades for $$$ ad everyone was cheering and anyone who asked tough questions like "why is supply so inelastic and is that a good thing?" got screeched at by ideologies. He's poking fun at that. The "(contractor)" bit is because it's usually not the guy doing the actual work making the big bucks. That guy's making marginally more. It's the guy billing that guy out who's seeing the lions share of the huge price increases.
      - JumpCrisscross 2mo ago
deleted 2mo ago
[deleted]
kittikitti 2mo ago
This directly because of the U.S. support of Israel. I also think as long as America keeps supporting Israeli military actions, there will be inflation. I won't forget how they enacted economic policies that knowingly caused layoffs of so many friends and colleagues but spared Israel with countless billions in spending. What was the point in increasing interest rates if we're going to enable genocides, increase gas prices, and spend so much money on defending America's worst ally?
credit_guy 2mo ago
For those who don't have access to ft.com, here's a link with the time series of the SPR from the EIA: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCSSTUS1&f=W https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W...
TitaRusell 2mo ago
Don't worry everything is going according to god emperor Trump's plan. TRUST THE PLAN
hadlock 2mo ago
So the US has 25 weeks, or 6 months of oil reserves left. One thing to note is that most jet fuel for europe comes from persian gulf oil. The US has been supplying Europe with jet fuel (at the cost of American gasoline) since the beginning of the war. If the US stops pumping out of the strategic reserve, there's not enough oil to produce both enough gas to stay below $5 a gallon, and keep the transatlantic/european aviation industry afloat. Iran has nothing to lose by turtling through the mid-terms and into January. They've been preparing for this war for 45 years, and everything is mostly going according to plan.
- CamperBob2 2mo ago
  This just in: Failed casino huckster defeated by country that invented chess. Ric Romero has more on this late-breaking story at 11!
  - mna_ 2mo ago
    Nitpick: Iranians didn't invent chess. Four player chess called Chaturanga was developed in India, then it was picked up by the Iranians (in Farsi, it's Shatranj) and later the Arabs (at some point here, it became a 2 player game). Then the Spanish picked it up from the Arabs. The Spanish and the Italians buffed the Queen and Bishop allowing these two pieces much greater movement, and this is chess as we know it today.
    - CamperBob2 2mo ago
      The best kind of correct! Another way to put it is that while chess originated in India, it was the Persians who gave us the term "checkmate." Which doesn't exactly invalidate my point.

71 points by mapping365 2mo ago

> The US government is continuing to release oil from its strategic petroleum reserve, which saw a drawdown of 3.8mn barrels to 307.7mn barrels — the lowest level in more than 40 years. Its operational minimum, below which further withdrawals risk damaging infrastructure and disrupting pipeline operations, is estimated at 180mn to 200mn barrels, according to industry analysts. So [EDIT: half] a year of reserves left at current rates and levels.

mapping365 2mo ago
No, less than a year, much less. There needs to be a certain level maintained in order to keep pressure and lot of the bottom stuff is unusable because of contaminants - it's like sludge.
- JumpCrisscross 2mo ago
  > There needs to be a certain level maintained Isn't that the "180mn to 200mn barrels"?
  - vel0city 2mo ago
    ~300 - 200 = 100mn useful barrels. If we're drawing it down by about 4 a week, that's about 25 weeks. If it's really closer to the 180 needed to prevent collapse and hit unusable supply then it's 120mn barrels and we're at 30 weeks. A year is 52 weeks. That also is based on a massive assumption of constant draw rate. Something is probably going to change, who knows when. Maybe the war ends and things actually reopen soon. Maybe Iran manages to blow up Saudi pipelines avoiding the straight. Maybe China's SPR runs out (nobody knows what it's at) and international demand skyrockets again. Other reserves are likely to be eliminated soon as well, putting more international pressure. I wouldn't have a clue what the rate will be in a month or two, but I can't imagine it'll be anywhere near the same as the past few weeks.
    - JumpCrisscross 2mo ago
      Oh yeah, I fucked up my math. Thanks.
    - whatisthiseven 2mo ago
      Regardless of usage patterns, oil simply can't go above a certain price or a chunk of the northeast dies in winter. This war is the largest self inflicted wound to the US in history. And Trump is pretending like all is fine because he keeps, erroneously, believing the oil problem he caused will resolve itself. Of course the next (Dem) president will be blamed for low oil reserves and high prices to refill it.
  - mapping365 2mo ago
    From what I understand, below 300 you start having issues, there's also a minimum national security level at 250 (not legally binding).
    - JumpCrisscross 2mo ago
      > below 300 you start having issues Source?
      - mapping365 2mo ago
        I'll try to find it again, it was in a Bloomberg podcast about energy.
  - Computer0 2mo ago
    This is unfamiliar territory, and honestly it's still an assumption. No one is sure at what level the system needs to remain stable.
deleted 2mo ago
[deleted]
sudosysgen 2mo ago
As the private/working reserves are set to reach operational minimums in a month or less at the current pace, the SPR will have to increase draw rate or there will have to be further demand destruction. If it goes to 7mn a week, below the 9.9mn peak draw recorded, that's 4.5 months. If it has to exceed peak rates as private/working reserves running out bites more than the optimistic numbers I'm using, or if China returns closer to pre-war oil imports, it will run out in 2-3 months. Before it runs out, the maximum draw rate will likely start falling - there are multiple facilities and some are already at or close to operational minimums - which will force demand destruction even before operational minimums. The operational minimums for commercial crude inventories are estimated at 300-380mn barrels, with current inventories at . Weekly draw rate this week was 7.2mn just for the commercial inventories, and levels were ~400mn barrels. So there's 20-100mn barrels remaining in the commercial inventory. Even moreso than the SPR, this is uneven, and maximum draw rates will decrease as individual storage reaches minimums.
- 0cf8612b2e1e 2mo ago
  Other countries have also been tapping into their own strategic reserves. When those run dry, that will put more pressure on any remaining sources. I am struggling to find updates on European reserve levels, but they must look similarly dire at this point.
Ancalagon 2mo ago
Literally the dumbest president of all time.

mullingitover 2mo ago

The fun part of this is the crack spread doesn't care about the relatively low price that crude is selling for. Refined petroleum is going for eye-watering prices, and will continue to do so for a very long time, even if peace breaks out tomorrow. Also seems pretty doubtful that oil prices would drop even if the war ended, given that everyone is going to be scrambling to refill their reserves for a very long time. On top of that, a lot of wells have been capped, which is a destructive act, so it'll take years to repair the supply. The real winners will be everyone who destroyed their own oil demand. I went out and bought an EV in May to replace an ICE vehicle, and the other car in the household hasn't burned through a full tank in the months since. They may have killed the EV subsidies in the US but they just went out and created a huge regressive tax on everyone not driving an EV.

gib444 2mo ago
Will the tradespeople (contractor) crowd turn up in this thread and cheer on the oil companies for making good money, damn any effect on the rest of the economy? ;)
- JumpCrisscross 2mo ago
  > Will the tradespeople (contractor) crowd turn up in this thread and cheer on the oil companies for making good money Huh?
  - cucumber3732842 2mo ago
    There was a thread about data-centers hiring trades for $$$ ad everyone was cheering and anyone who asked tough questions like "why is supply so inelastic and is that a good thing?" got screeched at by ideologies. He's poking fun at that. The "(contractor)" bit is because it's usually not the guy doing the actual work making the big bucks. That guy's making marginally more. It's the guy billing that guy out who's seeing the lions share of the huge price increases.
    - JumpCrisscross 2mo ago

deleted 2mo ago

[deleted]

kittikitti 2mo ago

This directly because of the U.S. support of Israel. I also think as long as America keeps supporting Israeli military actions, there will be inflation. I won't forget how they enacted economic policies that knowingly caused layoffs of so many friends and colleagues but spared Israel with countless billions in spending. What was the point in increasing interest rates if we're going to enable genocides, increase gas prices, and spend so much money on defending America's worst ally?

credit_guy 2mo ago

For those who don't have access to ft.com, here's a link with the time series of the SPR from the EIA: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCSSTUS1&f=W https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=W...

TitaRusell 2mo ago

Don't worry everything is going according to god emperor Trump's plan. TRUST THE PLAN

hadlock 2mo ago

So the US has 25 weeks, or 6 months of oil reserves left. One thing to note is that most jet fuel for europe comes from persian gulf oil. The US has been supplying Europe with jet fuel (at the cost of American gasoline) since the beginning of the war. If the US stops pumping out of the strategic reserve, there's not enough oil to produce both enough gas to stay below $5 a gallon, and keep the transatlantic/european aviation industry afloat. Iran has nothing to lose by turtling through the mid-terms and into January. They've been preparing for this war for 45 years, and everything is mostly going according to plan.

CamperBob2 2mo ago
This just in: Failed casino huckster defeated by country that invented chess. Ric Romero has more on this late-breaking story at 11!
- mna_ 2mo ago
  Nitpick: Iranians didn't invent chess. Four player chess called Chaturanga was developed in India, then it was picked up by the Iranians (in Farsi, it's Shatranj) and later the Arabs (at some point here, it became a 2 player game). Then the Spanish picked it up from the Arabs. The Spanish and the Italians buffed the Queen and Bishop allowing these two pieces much greater movement, and this is chess as we know it today.
  - CamperBob2 2mo ago
    The best kind of correct! Another way to put it is that while chess originated in India, it was the Persians who gave us the term "checkmate." Which doesn't exactly invalidate my point.