U.S. oil reserves hit lows, raising cavern damage risk

U.S. officials said the Strategic Petroleum Reserve (SPR) had been drawn down to unusually low levels by mid-August, raising concerns that the underground salt caverns used to store crude oil could face damage if inventories do not rebound.

The warning comes as pressure on fuel supplies has remained elevated. Data showed the average U.S. gasoline price reached $4.07 per gallon in mid-August, described as a late-summer record, adding to scrutiny of available buffers and near-term supply conditions.

Strategic Petroleum Reserve levels and storage risks

They pointed to releases approved after tension with Officials linked the current depletion to multiple authorized releases and sales over time. They pointed to releases approved after tension with Iran during President Trump's administration, as well as additional sales intended to ease high prices at the pump. They cautioned that keeping inventories at sustained low levels carries operational risks beyond reduced supply coverage. According to officials, low crude volumes can expose cavern walls to air and water, which can increase maintenance needs and make it more difficult to refill the caverns later. Fuel prices and tighter emergency cushioning Market participants said the reduced reserve leaves physical oil markets more sensitive to disruptions. With a thinner cushion, they said price moves could be amplified when supply signals are tight or when disruptions occur.

Traders and refiners typically view the SPR as Traders and refiners typically view the SPR as an emergency backstop that can help limit the immediate impact of supply interruptions. Participants said that with that backstop diminished, localized outages or shipping disruptions would be more likely to translate quickly into higher U.S. pump prices.

Monitoring through late August and key dates

Officials urged close attention to inventory reports through the rest of August. Market focus is expected to remain on whether stockpiles improve by August 31.

Participants also said attention will be on whether authorities announce steps aimed at protecting cavern integrity before the end of the month. Officials emphasized that the condition of the storage system matters alongside headline inventory levels, because maintenance requirements and refill complexity can shape how quickly the reserve can be restored.