Explainer: How the US’s strategic petroleum reserve works

US President Joe Biden has announced the release of one million barrels of crude oil every day for the next six months from the Strategic Petroleum Reserve (SPR), the largest such release from the United States stockpile in history.

The move comes as oil prices have spiked since Moscow’s invasion of Ukraine on February 24 and subsequent sanctions slapped on Russia by the US and its allies.

The latest amount of US oil release would make 180 million barrels available – or the equivalent to about two days of global demand – and marks the third time the US has tapped the SPR in the past six months.

It is also possible that the International Energy Agency, the world’s energy watchdog, of which the US is a member, may also release barrels when IEA countries meet on Friday.

The 31-member IEA, representing industrialised nations but not including Russia, presided over the fourth coordinated oil release in its history on March 1 of over 60 million barrels of crude – its largest yet.

As part of the IEA’s March release, the US committed to releasing 30 million barrels of SPR oil.

Before that, Washington pledged in November to release 50 million barrels of SPR oil, though an expected move in tandem from China did not materialise, as prices surged along with demand recovery for the COVID-19 pandemic.

Here’s what you need to know about the SPR and President Biden’s announcement:

Why was the SPR created?

The US created the SPR in 1975 after an Arab oil embargo led to a spike in gasoline prices and damaged the US economy. US presidents have tapped the stockpile to calm oil markets during war or when hurricanes hit oil infrastructure along the US Gulf of Mexico.

The reserve currently holds about 586 million barrels in dozens of caverns in four heavily guarded locations on the Louisiana and Texas coasts. The country also maintains small heating oil and gasoline reserves in the US Northeast.

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