Governments to buy millions of barrels to rebuild reserves depleted by Iran war

The US Strategic Petroleum Reserve has fallen to its lowest level in more than four decades, leaving the world's largest economy with a diminished buffer just as the fragile ceasefire between the United States and Iran appears to have collapsed.

SPR Drops to 319 Million Barrels

Data from the Department of Energy showed crude oil stocks in the SPR fell by 6.2 million barrels to 319.5 million barrels for the week ending July 3, the lowest level since April 1983. The drawdown is the culmination of a 172-million-barrel emergency release authorized by President Trump in March through the International Energy Agency's largest-ever coordinated effort, after the US-Israeli conflict with Iran sent prices soaring.reuters+5

Reuters ↗ 0.10% reported on Wednesday that governments worldwide are now set to buy millions of barrels through 2028 to rebuild depleted reserves, a process that could add up to 664,000 barrels per day of demand by the third quarter of 2027. Energy Secretary Chris Wright said in March the administration planned to replenish 200 million barrels within a year, though that timeline now faces uncertainty.reuters+1

Ceasefire Collapse Roils Markets

Oil prices surged on July 8 after Trump declared the Iran ceasefire "over" following fresh attacks on ships in the region and renewed Iranian threats to close the Strait of Hormuz. Front-month ICE Brent crude settled 5.2 percent higher at $78.02 per barrel, having traded as high as $80.59 intraday. The Washington Post reported the Dow Jones Industrial Average dropped more than 500 points in the opening minutes of trading.spglobal+2

The administration also revoked waivers that had allowed Iran to sell oil in US dollars, a move analysts say further tightens global supply. The physical Dated Brent benchmark, while rising sharply, remains well below the Iran war peak of over $144 per barrel reached in early April.youtube+2

China's Return to Market Adds Pressure

China's crude imports fell roughly 23 percent year-on-year in the first half of 2026, with May marking the sharpest decline at nearly 48 percent below prior-year levels, according to Signal Ocean vessel-tracking data. That demand reduction helped ease pressure on global markets during the worst of the Hormuz crisis.cyprusshippingnews+1

Now, Chinese independent refiners are returning. Reuters reported July 3 that refiners are snapping up discounted Middle Eastern crude, including Basrah Heavy and Al-Shaheen grades, for July-August delivery as the Strait of Hormuz reopened. S&P Global ↗ 0.49% reported at least four independent refineries purchased Middle Eastern cargoes in recent days. Preliminary tracking indicates China's July imports will rise modestly — about 2 percent above June — though they remain 41 percent below the same month last year.breakwaveadvisors+3

A Reuters poll of 33 analysts in late May forecast Brent crude would average $90.44 per barrel for 2026, though prices had since fallen to four-month lows near $71.57 before the ceasefire's collapse sent them rebounding. With the SPR near empty and China rebuilding inventories, the market faces renewed vulnerability should full-scale hostilities resume.reuters+1