US crude oil inventories have fallen to a "precariously low" level, with commercial stocks down by 7.2mn barrels and the US Strategic Petroleum Reserve (SPR) down by 3.8mn barrels. This sharp drawdown is attributed to increased refinery activity driven by surging fuel prices, exacerbated by renewed hostilities with Iran which are disrupting supply routes through the Strait of Hormuz.

Refineries are operating at 97 percent of capacity, with some in the Midwest at 100 percent, as US energy companies ramp up exports to meet global demand in Asia and Europe. Analysts warn that the substantial depletion of US stockpiles, which account for about 70 percent of global onshore crude inventory draws in the past four months, is eroding America’s capacity to act as a global energy supplier of last resort.

The SPR has dropped to its lowest level in over 40 years, with further releases risking damage to infrastructure and pipeline operations. This leaves the US increasingly vulnerable to future supply shocks, potentially leading to significant crude price increases as reserves approach their operational minimum.