June Goh warns of a "violent repricing" of crude oil as the U.S. Strategic Petroleum Reserve reaches a Reagan-era low.
June Goh, an analyst at Sparta Commodities, warns that crude oil faces a potential "violent repricing" as the U.S. Strategic Petroleum Reserve (SPR) continues to deplete. The reserve recently dropped to approximately 311.4 million barrels, a level not seen since March 1983. This rapid decline follows the drainage of 66 million barrels since the Iran conflict began. The administration has utilized the SPR to stabilize domestic gasoline prices and maintain exports while the Strait of Hormuz remains effectively closed. However, as the buffer thins, experts suggest that the safety net for preventing price spikes is nearly exhausted. TD Securities indicates that oil could reach $100 a barrel if physical shortages become evident. While the reserve has successfully capped prices at $3.85 per gallon recently, the shrinking stockpile leaves fewer tools for the administration to manage future shocks. Investors have already seen rewards from supply tightness, with major energy companies like Exxon Mobil and Chevron surging significantly year-to-date.