U.S. Crude Oil and Gasoline Inventories Fall to "Extremely Dangerous Low Levels" as Refinery Capacity Utilization Reaches 97%

U.S. crude oil inventories are being depleted at an alarming rate, sharply narrowing the supply buffer and causing deep concern in the market about future oil price trends.

Government data released by the U.S. Energy Information Administration on Wednesday showed that commercial crude oil inventories plummeted by 7.2 million barrels last week, while the Strategic Petroleum Reserve (SPR) decreased by 3.8 million barrels during the same period to 307.7 million barrels, marking its lowest level in over 40 years. Meanwhile, the capacity utilization rate of U.S. refineries has risen to 97%, with some facilities in the Midwest operating at 100% full capacity.

The direct trigger for this sharp decline in inventories was the renewed military conflict between the United States and Iran over the past week. Continued hostile actions between the two nations have severely restricted tanker traffic through the Strait of Hormuz, leading to persistent disruptions in the supply of oil and petrochemical products from the Middle East.

Analysts warn that the rapid depletion of inventories is eroding the United States' ability to act as the "supplier of last resort." Given that Asian and European markets are highly dependent on Middle Eastern oil, the consequences would be significant if the U.S. becomes unable to fill the supply gap.

Inventory Depletion Rate Far Exceeds Expectations

Matt Smith, an analyst at energy research firm Kpler, pointed out that U.S. commercial crude oil inventories and the Strategic Petroleum Reserve have cumulatively declined by nearly 20% since early April. "Over the past four months, the United States has accounted for approximately 70% of the global decline in onshore crude oil inventories."

He stated that the U.S. has been suppressing oil prices by releasing strategic reserves and expanding exports, but inventories are being rapidly exhausted, and "this rate of depletion cannot continue indefinitely."

Rory Johnston, founder of Commodity Context and an oil market analyst, used even starker language, stating directly that crude oil and gasoline inventories have reached "extremely dangerous low levels."

Strategic Reserve Hits Historic Lows, Operational Floor Comes into View

The Strategic Petroleum Reserve has currently fallen to 307.7 million barrels, its lowest level in more than 40 years. According to estimates by industry analysts, the operational minimum for the SPR is approximately 180 million to 200 million barrels—below this level, further withdrawals risk damaging infrastructure and disrupting pipeline operations.

This means the strategic buffer available to the U.S. government has been significantly compressed. Once reserves approach the operational floor, Washington will become increasingly passive in the face of future supply shocks, creating significant upward pressure on oil prices.

Another important factor driving this sharp drop in inventories is the high-intensity operation of U.S. refineries. Government data shows that refineries are producing gasoline, diesel, and jet fuel at a 97% capacity utilization rate to meet strong demand from energy markets in Asia and Europe. Some refineries in the Midwest have even reached 100% full capacity.

However, this high-intensity, export-oriented production model is accelerating the depletion of already tight domestic inventories, further reducing the room to maneuver in response to sudden supply disruptions. As tensions in the Strait of Hormuz continue to escalate, market doubts are rising regarding whether the United States can continue to play its role as a global energy stabilizer.