President Donald Trump has been talking a lot about controlling global oil prices, tweeting about Saudi Arabia’s need to ramp up production and, during a press conference with Russian President Vladimir Putin, posing the idea of "regulating oil prices."
There is good reason for Trump to be concerned. His administration's plan to sanction Iranian oil exports in November will create a significant global oil-supply decline. Oil prices that spike too quickly have caused past economic recessions, and the U.S. economy already is running hot ahead of midterm elections taking place when the Iran sanctions start in November.
For these reasons, there has been speculation Trump may seek to tap the U.S. Strategic Petroleum Reserve. The Trump administration also is reportedly lobbying international allies to release emergency stockpiles through the International Energy Agency, though the president's administration remains divided over the idea. The IEA denied the reports, telling the press “there have been no specific discussions about an emergency stock release.”
If Trump were to tap the Strategic Petroleum Reserve — the world’s largest supply of emergency crude oil, 660 million barrels stored in massive underground salt caverns off the coast of the Gulf of Mexico — it would be the first time that an SPR release was deliberately planned in advance.
Experts say this would set a precedent. Antoine Halff, senior research scholar and the head of the program on global oil markets at Columbia University’s Center on Global Energy Policy, said the SPR was never officially or explicitly intended as a tool of price management in order to reduce oil prices. Instead, it is to be used as a buffer stock of oil in an emergency and as a deterrent against the use of oil as a political weapon.
SPR oil has been released 19 times, according to the Department of Energy, as a result of supply chain disruptions. It was created by the Ford administration after the OPEC oil embargo of 1973. There have been three "emergency" situations that has resulted in the SPR being tapped, according to energy market experts: after Operation Desert Storm in 1991, which took out Middle Eastern oil supply; after Hurricane Katrina in 2005 and after the 2011 conflict in Libya, which led to supply disruptions.