Further withdrawal from the Strategic Petroleum Reserve (SPR) of the United States could undermine the ability of the administration of US President Joe Biden to deal with a future shock in the oil market, writes Markets Insider.

Last year, Biden unlocked more than 200 million barrels of supplies after Russian President Vladimir Putin’s war against Ukraine rattled energy markets. SPR, the world’s largest crude stockpile, is now at its lowest level since 1983.

Congress already approved the release of an additional 26 million barrels in April, bringing U.S. stockpiles after this upcoming drawdown to 346 million barrels – nearly half of what they were when President Biden took office in January 2021.

While the remaining amount exceeds the total number of barrels unlocked last year, analysts warn that actual US stocks may be lower than official figures show.

What analysts say about the reduction in oil supply in the US

“Allowing this pullback has placed an undue strain on U.S. resources and limited our ability to respond to a sudden spike in oil prices,” said James West, director of banking consultancy Evercore ISI.

“Once the SPR falls to 346 million barrels as a result of the release in question, the White House will have very limited options for further withdrawals from the strategic stockpile,” said Victor Katona, an analyst at Kpler, a commodity advisory firm.

But Katona notes that the U.S. has become less dependent on oil imports in recent years after soaring domestic production, meaning an external shock will be felt just as it was a decade ago.

“So 346 million barrels will probably be enough. The gradual abandonment of options is a cause for concern,” he says.

The US has targeted its major oil producers

Last October, President Joe Biden harshly criticized major American oil producers, asking them to increase production.

“Refinery profits are twice as high as usual. And the distributor’s margin is more than 40% higher than usual,” he wrote on Twitter on October 19.

There is an urgent need to “sensibly increase oil production in the United States,” he urged during a press conference a day later, stressing that “American families are suffering” due to rising fuel prices.

Biden’s comments came in the context of his administration’s failure to convince Saudi Arabia to support OPEC’s increase in global oil production, a situation that has fueled unprecedented tensions between Riyadh and Washington in decades.

In July, Joe Biden personally visited Saudi Arabia on an official visit precisely to try to convince the US ally in the Persian Gulf to put more oil on the market.