• The US Department of Energy offered up to 40 million barrels of crude from the Strategic Petroleum Reserve (SPR) in June as part of a broader international effort to offset supply disruptions, but the solicitation attracted only 500,000 barrels of demand.
  • The limited uptake underscores weak commercial interest in the exchange structure, which required companies to return borrowed barrels with a premium, even as the SPR sits at its lowest level since 1982.
  • Oil prices remain volatile amid Middle East tensions, with Brent settling at $104.32 and WTI at $92.41 on September 25.

US Oil Reserve Offer Gets Cold Shoulder

The US Department of Energy’s June offer to loan up to 40 million barrels of crude from the Strategic Petroleum Reserve drew lackluster demand, with the agency ultimately awarding just 500,000 barrels to trading firm Vitol. The deal, first reported by Reuters, represented a mere 1.25% of the offered volume, according to people familiar with the matter.

The exchange was part of a broader 172-million-barrel US contribution to an International Energy Agency (IEA) emergency release aimed at offsetting supply disruptions linked to the Middle East war and restricted flows through the Strait of Hormuz. The IEA’s 400-million-barrel collective release—the largest in its history—was approved in March after the conflict pushed flows through Hormuz to less than 10% of pre-conflict levels. Before the war, the strait handled roughly 20% of global oil supply.

Exchange Terms Fail to Attract Bidders

The offered oil came from the SPR’s Big Hill and Bryan Mound storage sites on the US Gulf Coast. Participating companies were required to return the borrowed barrels later, plus a premium in additional oil—a structure designed to add immediate supply while replenishing the reserve over time. But with oil prices elevated and future replacement costs uncertain, commercial firms saw little economic benefit in accepting the return obligations.

“A loan is less attractive when future replacement barrels are expected to be cheaper or when logistics, price risk, and financing costs outweigh the value of immediate crude access,” one market analyst noted. The weak participation suggests that the Department of Energy may need to adjust timing or contract terms if it wants greater commercial involvement in future offerings.

The broader release has materially reduced the reserve. DOE data put SPR inventory at 283.8 million barrels in the week ended September 25, the lowest level since October 1982. The drawdown has raised concerns about the US’s ability to respond to future supply shocks, such as hurricanes or infrastructure outages.

Market Volatility Persists

Oil prices remain volatile. Brent settled at $104.32 per barrel and WTI at $92.41 on September 25, after falling on hopes for US-Iran de-escalation. However, continued attacks and uncertainty around Middle Eastern supply limited the decline. The IEA has warned that global oil supply could fall by 4.3 million barrels per day in 2026 if the conflict persists.

By late September, US and Iranian representatives were reportedly exploring a phased path toward ending the conflict that could involve reopening Hormuz and lifting US economic restrictions. Those discussions remain highly uncertain, particularly because Iran has linked progress to nuclear-policy demands.

The reserve drawdown creates a policy tradeoff: releasing oil can cushion an acute supply shock and household fuel costs now, but it leaves the United States with a smaller buffer for later disruptions. Energy Secretary Chris Wright said premiums from the exchange could add roughly 35–40 million barrels this year and next, though the overall return of oil is expected to stretch beyond late 2028.

Correction: An earlier version of this article misstated the amount of oil awarded from the June solicitation. It was 500,000 barrels, not 5 million.