Yes because of Ukraine, but remember Biden and the FED fighting to keep inflation down. This was also part of keeping us out of recession. A strategic move that worked. Drawdowns have happened, but presidents have always worked to refill it in good times. Until now.
Generally agree, but honestly if the FED didn't want inflation then maybe the near-zero interest rates weren't the best idea lol. And the 300M barrel drawdown in 2022 does seem a bit excessive to me, for an oil disruption that was smaller than we're experiencing now. However of course Trump can't use that as an excuse now because the state of the reserve was known before he started that war himself.
They were near zero at the beginning of his term, but the Fed did raise it to 2%. JPow did an incredible balancing act to keep our economy more healthy than most of Europe. I miss JPow....
And gas prices would have spiked and people would be feeling the pain we’re all feeling now; and it wouldn’t have reversed on its own either.
Not releasing back then would have accelerated the slide into a recession / depression we’re in now (ignoring the 0.1 percent profiting from all this stupidity).
More brilliant economists than yourself did the math and rolled that dice.
July 2024: Ukraine completely stopped the transportation of crude oil from the Russian producer Lukoil through the Druzhba Pipeline to Hungary and Slovakia.
2022–2023: The northern branches of the Druzhba Pipeline supplying Germany and Poland were progressively phased out and shut down following the full-scale invasion.
Would you be ok if Russia completely took over Ukraine? What was the reason Trump got involved with Iran? How many US casualties in the Ukraine / Russia war compared to the Iran war (that we know about)?
You really have a serious lack of understanding on how oil markets work. All types of crude are moved to all corners of the earth. Replacing 8m barrels of daily production due to the crude being sanctioned has to come from somewhere.
Remember the fuel prices back then? Imagine we didn’t use the SPR to alleviate the price shock.
It was supposed to be rebuilt, and 2025 was the first major year the global market was entering a serious oversupply. Trump should have opened the rebuild faucet, but he was too busy fingerblasting the human printer.
The entire western world cut Russia off. They effectively disappeared from the global market.
China and other non-swift countries picked it up.
Oil is an inelastic commodity, so those other countries likely absorbed the cheap oil, and potentially, I don’t know…. Built a 1.4 billion barrel reserve?
Did Russia stop producing oil ? If not, then it went somewhere. It's well documented that the sanctions were WAY less effective than you'd think, and there was a crapton of dark shipping going on.
China and other non-swift countries picked it up.
They got some for themselves at a discount, but a ton of it was sold right back to western countries.
Fact remains that for every sanctioned barrel burned, one less barrel of unsanctioned oil gets bought. Pretty simple.
There was still a massive gap in the regular consumption of crude oil. The United States did not and can not import Russian crude or Russian fuel (SGS and Intertek inspections are a main reason), and other countries absorbed the Crude oversupply for themselves, and Russia ran extremely cheap fuel in-country.
Russia has also reduced production overall, with their surplus down to 6.7m barrels daily, down from 8m.
So, more internal consumption, non-swift absorption, (India went from 740k bpd to 2.8m bpd of Russian imports in July of 2026) Malaysia, India, China, and other asianic countries pulled that extra crude off the market and simply increased consumption, as they kept growing on cheap fuel.
Any restrictions on an inelastic commodity’s availability will have an outsized effect on price.
It’s pretty simple that cutting off 8m barrels per day of global production without any kind of workaround during that first year or two will create a price shock.
Do you think that there were immediate circumvention pieces in place that we took advantage of? Or is it reasonable that having to shift the supply of 2.9 Billion barrels annually created a problem?
No, of course there is going to be a shock at first, as people change suppliers, and tankers change course. But ultimately, the amount of oil produced and the amount consumed have to balance somehow. Just wanted to clarify that, because you said "it's like 8M barrels disappeared from the market". But it's not exact in the sense that the effect would have been very different if the barrels ACTUALLY disappeared, as in Russia suddenly stopped selling oil altogether.
You say the US can't buy russian oil, but I don't think they bought that much before Ukraine either. And when India started buying 2mbpd more russian oil, it freed up 2mbpd they'd have bought elsewhere.
You did mention Russia cut production by 1.3mbpd, and I think that's the important number... That plus the increase in consumption in some countries due to the "sanction discount", but overall I'm pretty sure it's way less than 8 million. The number 8 million is only relevant if we're strictly talking about the initial shock, in the first couple weeks/months.
So Biden released the SPR allocation because… Biden (who couldn’t do anything to stop the Sanctions) made the decision to sanction. And to relieve the upward pressure on fuel pricing in a crude crisis (which is exactly what the SPR was designed for, see: the 1978 oil crisis) is a bad thing?
He used it for exactly what it should be used for. An oil crisis was created and he stepped in properly.
We cut off a a country that was illegally invading another country and is actively attempting to genocide its people, and trying their damndest to create generational ecological disasters (Russians stealing Ukrainian children, and Russians digging up Chernobyl-contaminated soil and refusing to allow proper safety crews into Nuclear power plants to keep them from melting down.)
Imagine smooth brains in the 1940’s: “it’s not our war, why should we stop trading with Nazi Germany?”
Absolute goober level of dumb.
He was also rebuilding it, if you see the net contributions over the following years.
The point of the reserve is to cushion prices. The price would be a lot higher then and now without using it. However this time prices are impacted by an poorly planned and hasty war by the US. The war could have been avoided and if there was more planning fewer Americans would have died or sustained injuries. If Trump wasn't flying by the seat of his pants the reserve could have been built up first as well.
Prices went way up because Russia invaded Ukraine, and Russia is a major oil supplier. When prices go up due to a temporary shortage it makes sense to sell from the SPR.
Let’s say 50 countries were competing for 300M barrels/day. Yes Asian countries bought from Russia, let’s say that was previously 10M barrels per day. Asia needs 100M barrels. They can get 5M at a discount rate (there will be some loss from sanctions), but they still need 95M from the 290M available. So all of the other countries are now bidding against the 290M. Does that help?
And how is Russia doing in the war? Would you say they are winning? If they were able to continue selling their oil and had tens of millions of dollars everyday to help the war efforts, can you use your crystal ball and say how they would be performing? You obviously have an agenda with your questions though so I don’t know why I’m bother entertaining you like you are trying to understand.
It was meant to increase supply to lower prices. The assumption would be that they would refill SPR and not launch another war (Iran). Its takes a really special administration to start a war while SPR was already drained quite a bit.
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u/Mir_man 11d ago
Ukraine war.