Despite Donald Trump's "Drill baby drill" and two decades of the shale oil boom, the war with Iran has melted US reserves to their lowest level since 2004, fueling fears of a sustained surge in oil prices and a global economic shock.
"Drill baby drill," Donald Trump urged during his 2024 election campaign, wanting US oil companies to "drill like crazy." And it worked for a time. The shale revolution had made the country the world's top oil producer and a major exporter.
But since the beginning of the war in Iran in late February, the situation has reversed. The stocks built up have completely melted away. US oil reserves have reached their lowest level in more than two decades, a direct consequence of the conflict between Washington and Tehran and the resulting disruptions in global energy markets.
According to weekly data published Wednesday by the Energy Information Administration (EIA), total US crude oil and petroleum product stocks fell by 10.6 million barrels in the latest week to 1.57 billion barrels, according to calculations by the Financial Times. This is the lowest level recorded since 2004.
This decline comes as the Trump administration has increased withdrawals from the Strategic Petroleum Reserve to mitigate the rise in energy prices caused by the conflict with Iran. At the same time, US exports have surged to compensate for supply losses from the Middle East, particularly to Europe and Asia.
Oil markets worried
Last week, combined commercial and government crude oil stocks fell by 16 million barrels. US exports reached nearly 5.9 million barrels per day, a historically high level, as international traders seek alternatives to Gulf cargoes.
Oil markets are reacting with concern to this rapid depletion of reserves. The price of US crude oil rose 2.6% Wednesday to $96.17 per barrel. Several analysts believe the trend could accelerate if geopolitical tensions persist.
Bob McNally, president of consulting firm Rapidan Energy Group and former White House adviser, quoted by the British newspaper, believes prices could rise further. According to him, oil could reach $200 a barrel over the summer if the Strait of Hormuz, the main maritime corridor for Gulf hydrocarbon exports, remains closed to tankers.
The expert also warns of the broader consequences of a prolonged surge in energy prices. A sustained rise in oil could fuel inflationary pressures, weaken global growth, and increase risks to the financial system.
The fall in US stocks is gradually erasing the significant volumes accumulated over the past two decades thanks to the shale oil revolution. As military tensions continue to disrupt global energy flows, the evolution of US stocks now appears to be one of the main indicators monitored by markets to measure the scale of the ongoing oil shock.
