Inventories at Cushing, Oklahoma, the largest commercial crude oil storage hub in the US and the pricing point for West Texas Intermediate, have fallen to approximately 20 million barrels, the lowest level since 2014. This figure is considered the operational minimum by most traders, meaning that below this level, extracting usable oil becomes difficult and expensive, and crude quality can be compromised. This decline is largely attributed to surging US oil exports to fill global supply gaps created by the Iran war, which has impacted about 20% of the world's energy flows through the Persian Gulf.
Overall US oil inventories, including fuel and strategic stockpiles, are at their lowest since 1985. The US Strategic Petroleum Reserve (SPR) has also been drawn down to roughly 340 million barrels, the lowest since 1983, as part of a plan by the Trump administration to release 172 million barrels to help ease rising fuel prices. This significant reduction in both commercial and strategic reserves leaves the US with little buffer against potential future oil supply shocks.
The falling inventory levels at Cushing have supported a phenomenon called backwardation in the nearest two US crude futures contracts, indicating tight near-term supplies in the region. Despite the record exports, domestic demand remains high, with Midwest refineries that rely on Cushing supplies operating at record volumes. Analysts and energy leaders, including Chevron CEO Mike Wirth, anticipate that these ultra-low inventory levels could lead to higher fuel prices in the coming weeks. International organizations like the IEA, IMF, and World Bank Group have also voiced concerns about the rapid depletion of global oil inventories and the growing risks to fuel security and the broader economy.
