We Spent 61% of Our Oil Reserve to Hide the Price of a War
With the Iran War reaccelerating, it’s worth taking stock of the financial situation around oil that seems to be driving every decision that the Trump Regime makes.
The Strategic Petroleum Reserve is a stockpile of crude the federal government keeps in salt caverns along the Gulf Coast to blunt a supply shock. The beginning of the Ukraine War ate into the SPR quite a bit in 2022, but going into this war, the SPR was in decent shape and getting better. It had been refilling steadily through all of 2025, climbing from about 394 million barrels in January 2025 to a peak of roughly 415 million barrels in early March 2026.
Then Operation Epic Fury started on February 28th. On March 11th, the administration authorized the release of 172 million barrels. And the reserve fell off a cliff:
- April 3: 413.3 million barrels
- May 1: 392.7 million
- June 5: 349.2 million
- July 10: 316.5 million
That is the lowest the Strategic Petroleum Reserve has been since 1983. Ronald Reagan was in his first term the last time America had this little oil in the ground.
- 1 12-Day War · Jun 2025
- 2 Operation Epic Fury · Feb 28 2026
- 3 172M-bbl release · Mar 11
- 4 Ceasefire · Apr 8
At first glance, it might seem like we still have a decent amount of the reserve left to continue weathering the storm. You’ll see the low number reported as “the SPR is only 44% full,” measured against its 714-million-barrel capacity. That framing is technically true and almost entirely useless, because the reserve was never going to be drained to zero and no one ever planned for it to be.
The number that actually matters is how much was spendable.
Under the Energy Policy and Conservation Act, there’s a statutory floor at 252.4 million barrels. Below that line, the government loses its “limited drawdown” authority (the flexible, lower-bar tool it can reach for without the President formally declaring a severe energy supply interruption). This is the number we can look at as an ‘oil crisis’
So some quick math on what was actually usable:
| Barrels | |
|---|---|
| Pre-war peak (early March 2026) | 415.4M |
| Statutory floor | −252.4M |
| Usable reserve going in | 163.0M |
| Drawn down through July 10 | −98.9M |
| Usable reserve left | 64.1M |
About 61% of America’s usable strategic oil reserve was consumed in roughly five months. Not 61% of some theoretical maximum, 61% of the oil the government could actually reach for without declaring a national emergency.
And there’s a detail in here that I think deserves a lot more attention than it’s gotten: the March 11th order authorized 172 million barrels, but there were only 163 million available above the statutory floor. The release that was announced was larger than the flexible authority permits. That means it either gets quietly trimmed, or it runs on emergency authority that has no floor at all, or it goes straight through the line Congress drew. All of these scenarios are insane.
The SPR has done its job in terms of blunting the supply shock of oil, but it’s only useful in short term, not the long term quagmire that this war is turning out to be.
The monthly drawdown actually slowed between June and July. And the futures market never panicked at all. Even at the peak, with spot above $102, contracts for delivery a year out never got above $76, which is the market’s way of saying it always expected this disruption to be temporary. Some of what was released was structured as loans and exchanges that are supposed to come back. All of this points to the expectations markets have that this is a short term disruption. The problem is that the party who decides how long this goes on isn’t us, it’s Iran.
Iran found a WMD, and it isn’t nuclear
Here’s the uncomfortable strategic reality. We spent two decades and enormous effort making sure Iran couldn’t get a nuclear weapon, and in Epic Fury we destroyed a great deal of what was left of that program. But somewhere along the way Iran acquired something that functions like one anyway: the ability to threaten the Strait of Hormuz.
It has most of the properties we care about in a WMD. It can inflict massive, immediate global damage. It costs comparatively little to deploy: mines, small boats, anti-ship missiles, and the credible threat of using them. And critically, it works as deterrence even when it’s never used, because the mere possibility of it reprices oil for the entire planet.
A country that has been decisively out-gunned in conventional terms, does not give up the one asymmetric card it holds. Expecting Iran to bargain that away is expecting a state to voluntarily disarm itself of its only remaining leverage. It isn’t going to happen, and no amount of bombing changes that calculus. If anything, flattening the conventional military makes the chokepoint more central to Iranian strategy, not less.
I’ll add the caveat, because I think it makes the argument stronger rather than weaker: this leverage cuts both ways. Iran exports its own crude through that strait, and China, its most important customer, brings roughly half its imported oil through it. Closing Hormuz is genuinely costly to Iran and infuriating to its only real patron. That’s a meaningful constraint, and it’s part of why the futures market kept betting on “temporary.”
But a constraint is not a solution. It just means the weapon is expensive to fire, which is true of most weapons we consider unacceptable.
Who actually benefits
The real winner of this war is clearly China, and here’s why: Not because they’re clever about oil, they’re the most Hormuz-exposed major economy on earth. They benefit because they’ve spent fifteen years building the industrial base for the alternative. They dominate solar manufacturing, battery production, refined lithium, and EVs. Every oil shock is, functionally, a marketing campaign for products China happens to be the world’s largest supplier of.
There are American companies positioned to gain too, domestic producers, LNG exporters, and the utility-scale storage and grid firms that benefit from exactly this kind of volatility. The upside isn’t exclusively Beijing’s. But we’ve structured our policy so that we capture the smaller half of it.
The Only Way Out
So here’s where I land, and it’s more optimistic than the rest of this probably sounds.
Every tool we used this spring was a delay tool. The SPR buys months. Diplomacy buys quiet until the next flashpoint. Bombing campaigns demonstrably do not remove the underlying leverage, we just ran that experiment at enormous cost and Iran still controls the strait.
There is exactly one thing that permanently defuses a chokepoint, and it’s making the stuff that flows through it matter less. An economy that runs substantially on electricity generated domestically: solar, wind, nuclear, storage, is an economy that cannot be held hostage at a strait eight thousand miles away. It’s not even an environmental concern anymore, it’s the single most straightforward national security argument available, and it’s the only exit from this loop that doesn’t require Iran’s cooperation.
The current administration is moving hard in the opposite direction, treating fossil production as the answer to fossil vulnerability. But I take some hope from the fact that the underlying economics have stopped caring about who’s in office. Solar and storage are now the cheapest new sources of energy in most of the country, and that math is being driven by manufacturing costs and utility procurement decisions, not by federal enthusiasm. Policy can slow this down, but it’s fighting a cost curve, and cost curves are extremely hard to legislate against.
We just spent 61% of our strategic reserve to keep the price of a war off the pump. We can keep paying that way until the savings account is empty. Or we can build the thing that makes the chokepoint irrelevant.
I know which one I’d rather my kids inherit.
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