Strategic Oil Reserve Nears Collapse… US Must Choose: Guns or Butter

As of the week ending June 12, 2026, the US Strategic Petroleum Reserve (SPR) held approximately 340.25 million barrels of crude oil… Sounds like a lot, but it is approaching the danger zone. In late May, that number was 372 million barrels, which consisted of Sweet crude: ~142 MMB | Sour crude: ~230 MMB, according to the US Department of Energy.

The oil is stored in caverns at four sites:

Bryan Mound: ~166 MMB

Big Hill: ~90 MMB

West Hackberry: ~72 MMB

Bayou Choctaw: ~44 MMB

To understand how perilous the situation is you need to know that if the oil level in these caverns falls below a certain level that the structural integrity of the caverns would be jeopardized. The most commonly cited operational floor is around 20% of capacity. Mike Sommers, CEO of the American Petroleum Institute, told CNN that the SPR must be at least 20% full to remain operational — that’s roughly 143 million barrels against the SPR’s ~727 million barrel design capacity.

So subtract 143 barrels from 340.25… That means the US only has 197.25 million barrels left before the caverns could face irreparable damage. If the US consumers, who use 20 million barrels a day, had to rely exclusively on the SPR, the US only has less than a 9-day supply of reserves. If you compare the amount reported at the end of May (i.e., 372 MMb) with the June 15th report, the US is drawing 16 million barrels a week from the reserve. This is the optimistic scenario, i.e., the US has roughly a 12-day supply before the proverbial shit hits the fan.

But wait, it gets worse. The US Military has blown through its jet fuel reserves. The problem is compounded becuase Diesel reserves are at 25 year low. Diesel and Jet Fuel are critical Distillates. So the Trump administration must make a choice: support the military jets with jet fuel, or support the trucking Fleet with enough diesel fuel, to provide food and products to US consumers. Trump can’t wage war and keep the economy going at the current rate because diesel and jet fuel compete with each other when comes to production. So the question is, do you want to wage war or do you wanna save the economy and keep the trucks moving on the road? This is the main reason Trump signed the MoU with Iran.

A friend who is an energy analyst summarized the dilemma as follows:

The strategic warning is that the United States cannot assume it can fight a major fuel-intensive conflict and protect the domestic economy without tradeoffs. Military jet fuel, commercial aviation fuel, diesel, heating oil, and marine fuel all draw from the middle distillate portion of the refined barrel. Refineries can bias output, but they cannot instantly maximize every middle-distillate product at once.

The risk is not that every truck or aircraft stops at once. The risk is that a forced fuel-priority decision creates cascading shortages and price shocks across logistics, aviation, agriculture, construction, and consumer supply chains. A war-time jet-fuel surge could reduce the diesel cushion; a civil-aviation diversion could disrupt passenger movement and air cargo. Either channel can become recessionary because both diesel and jet fuel are operating fuels for the real economy.

The US is not the only country or region facing a massive problem. Europe is screwed. An April 2026 report by Karl Miller — The Iran War, the Strait of Hormuz and Europe’s Compound Energy Trap — spells out the danger facing Europe. Here is the Executive Summary:

This report assesses whether the European Union faces a structural energy-security Prisoner’s Dilemma with Russia, with Germany at its centre and the Persian Gulf crisis as the accelerant. The argument is blunt: the Union has deprived itself of the low-cost Russian oil and gas system that underpinned much of its industrial base, while the Iran war and the Strait of Hormuz disruption have simultaneously impaired the maritime energy system that supplies a decisive share of the world’s oil, refined products and LNG.

Europe is on its knees in strategic terms. It is not literally without emergency stocks, because EU and IEA rules require minimum oil inventories. The harder reality is more damaging: those inventories are finite, unevenly usable, commercially fragile and unable to replace the normal flow of crude, diesel, jet fuel, LPG, naphtha and LNG through global markets. Emergency stocks buy time; they do not restore cheap Russian pipeline gas, reopen Hormuz, rebuild refining flexibility or prevent member states from bidding against one another.

The EU therefore faces a compound trap. Russian gas is being removed by law, Persian Gulf flows are exposed to war, U.S. LNG has become indispensable but expensive, storage refill is costly, and Germany’s industrial model remains dependent on affordable dispatchable energy. Each member state can rationally protect itself through bilateral contracts, subsidies, exemptions and emergency procurement, yet those same choices weaken the Union’s collective bargaining power and deepen fragmentation.

The conclusion is that the EU is locked into a repeated, asymmetric collective-action game. Escaping it requires enforceable solidarity, shared critical-fuels planning, coordinated storage, firm-capacity realism, a diversified LNG portfolio, strategic petroleum-product management, and legal reforms that make cooperation faster and more profitable than national defection.

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I did another update podcast with Nima:

I also updated Mario on the Israeli stand down in Lebanon:

I also discussed the latest events with Sulaiman:

I did an interview two days ago with Danny, who hosts Capitalcosm:

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