Biden is Not Joking Around

The potential implications of an unprecedented SPR release

President Biden is determined to bring down oil and gasoline prices and yesterday he announced that the U.S. will release up to 180 million barrels of oil from the government’s Strategic Petroleum Reserve (SPR) over the next six months, starting in May.

The U.S. SPR is the world’s largest emergency supply of crude oil.  It was established in the mid-1970s in response to the 1973 oil crisis to mitigate supply disruptions.  It has an authorized capacity of 714 million barrels and currently holds 568.3 million barrels in four storage sites on the U.S. Gulf coast.

This giant SPR release of 1 million barrels per day for 180 days follows two previous drawdowns that were done recently: On November 23, 2021, 50 million barrels were released to “address the mismatch” between supply and demand during the pandemic and another 30 million barrels were released earlier in March 2022 to counter the impact of the Russian invasion of Ukraine on oil prices.

In this Opinion, we will try to figure out how this SPR release may impact the tanker market.

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