Even if the IEA releases oil reserves, it would be like a drop in the ocean, Trump faces a dilemma of whether to "fill up" or "release"

Due to the conflict leading to interruptions in oil exports from the Persian Gulf, governments around the world have a key line of defense against price shocks: emergency reserves, such as the Strategic Petroleum Reserve (SPR) established by the United States in the 1970s, which aims to provide security in response to energy crises. The Iran war has caused oil and gasoline prices to soar, putting pressure on US President Trump and other world leaders, potentially forcing them to tap into these special reserves. How large are the emergency oil reserves? According to the International Energy Agency (IEA), its 32 member countries collectively store at least 1.2 billion barrels of oil in emergency public reserves. The IEA is responsible for coordinating the release of oil reserves among countries. The IEA, headquartered in Paris, has assisted in implementing five such intervention measures: on the eve of the Gulf War in 1991, after Hurricanes Rita and Katrina in 2005, after the outbreak of the civil war in Libya in 2011, and during the oil supply interruptions caused by the Russia-Ukraine war in 2022. Among the IEA member countries, the United States has the largest oil reserve, which consists of four heavily guarded facilities along the Gulf Coast. These deep and massive underground caverns can store over 700 million barrels of oil. According to the US Department of Energy's data, these caverns currently store around 415 million barrels of oil, accounting for only 60%, due to the record release of oil reserves by then-President Biden after the Russia-Ukraine war broke out. What is the current focus of discussion on releasing oil reserves? Finance ministers of the G7 countries stated on March 9 that while they are prepared to use strategic oil reserves, it has not reached the point of taking action yet. Trump has been reluctant to tap into US oil reserves. He and his Energy Secretary Chris Licht have both claimed that high oil prices are only temporary. According to local media reports, Japan has instructed its oil storage facilities to prepare for releasing oil, indicating that Japan may take independent action, but the Japanese government has stated that no decision has been made. India stated on March 9 that it does not intend to use its oil reserves. Can releasing oil reserves compensate for the oil shortage caused by the war? Oil traders have expressed doubt about this. Even if the maximum reduction rate of the US Strategic Petroleum Reserve combined with the oil shipments of other IEA member countries, it may only partially compensate for the estimated loss of oil supply from the Persian Gulf of 11 to 16 million barrels per day, according to Citigroup. According to data from the US Department of Energy website, the maximum release capacity of the Strategic Petroleum Reserve (SPR) is 4.4 million barrels per day, and after the President makes a decision, it takes 13 days for SPR oil to enter the open market. However, a 2016 US Department of Energy analysis report indicated that the actual release volume may only be between 1.4 to 2.1 million barrels per day. An analysis by ClearView Energy Partners of the data from the US Energy Information Administration showed that during the release process after the Russia-Ukraine war broke out in 2022, the oil release from the SPR never exceeded 1.1 million barrels per day. Why has the Trump administration been reluctant to use US oil reserves? One view is that the oil market is sufficiently supplied to cope with the crisis. Licht stated on March 8 that due to the surge in US oil production, there is currently "no shortage"; while IEA Executive Director Fatih Birol stated last week that there is a "huge surplus" at present. The hesitance of the Trump administration may be partly due to political reasons. For years, the President and other Republicans have criticized the Biden administration for reducing US oil reserves, and tapping into oil reserves may invite criticism from the Democrats. In addition, there are logistical reasons. The Trump administration has been working to replenish oil reserves - the President has pledged to "fill it up" - but the design of the reserve does not allow for simultaneous receipt and release of oil. Furthermore, the Trump administration stated that the oil reserve release plan initiated by Biden has damaged the relevant facilities, which are still undergoing repairs. Under what circumstances can the US President release oil reserves? This is almost entirely the President's prerogative. The law establishing the Strategic Petroleum Reserve in 1975 provides that if there is a "severe energy supply interruption" threatening national security or the economy, the President may order a full release of oil reserves. If there is a "widespread or long-term domestic or international energy supply shortage," limited release of oil reserves (up to 30 million barrels) may be ordered. How has the US President utilized oil reserves? Apart from temporary measures to address local oil supply interruptions, the US has rarely tapped into oil reserves before 2022. Biden tapped into 50 million barrels of oil at the end of 2021 as part of a coordinated multi-country action to lower soaring fuel prices. In 2011, President Obama released 30 million barrels of oil to jointly address supply interruptions caused by Libya. In 2005, President George W. Bush released 11 million barrels of oil after Hurricane Katrina. In 1991, President George H.W. Bush released 17 million barrels of oil during the first Gulf War. In 2017, when Hurricane Harvey ravaged the Gulf Coast region, the US Department of Energy authorized the release of 5 million barrels of oil to refineries in the region. Such arrangements are intended to meet short-term emergency needs, with crude oil being physically repaid in the future. What are the prospects for replenishing US oil reserves? Trump had pledged to replenish oil reserves, but progress has been difficult so far. In March last year, when oil prices were around $68 per barrel, Energy Secretary Licht estimated that $20 billion would be needed to replenish oil reserves. To date, Congress has only allocated $171 million to the Department of Energy for purchasing crude oil, and the Department has only used a portion of it to purchase around 1 million barrels of crude oil. Licht has stated that the US is exploring "innovative methods" to replenish oil reserves, namely having private companies provide oil. This apparently refers to using the so-called "in-kind payment" arrangements, where the US accepts oil and natural gas from producers instead of cash royalties for federal energy resources.