Biden's depletion of emergency oil stocks comes back into focus amid Israel-Hamas war, price surge

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President Biden's decision to drain the Strategic Petroleum Reserve (SPR) to its lowest level in decades is back in the spotlight amid the war between Israel and Palestinian Islamist group Hamas, which has caused oil prices to surge.

On Monday, the Brent crude index, the worldwide oil benchmark, and the U.S. WTI index both surged more than 4% and inched closer to $90 a barrel as a result of volatility created by the Middle East crisis. According to analysts, the conflict — triggered over the weekend after a series of unprovoked attacks by Palestinian militants on Israelis — may lead to large amounts of global oil supplies being withheld.

"If the conflict envelopes Iran... up to 3% of global oil supply is at risk. And if a wider conflict eventuates that ends up impacting transit through the Strait of Hormuz, around 20% of global oil supply could be held hostage," energy analyst Saul Kavonic said in an interview with Reuters.

"Timing is everything and the attacks almost certainly postpone any Saudi-Israeli rapprochement, along with any high probability expectation of Saudi Arabia reducing or eliminating its extra 1 million [barrel per day] cut if prices resume their recent fall," analysts with Citibank added in a note.

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President Biden speaks in the State Dining Room of the White House on Saturday. (AP/Manuel Balce Ceneta)

However, the Biden administration has depleted the SPR, which contains an emergency oil supply and was established for emergency scenarios, to its lowest level in four decades. The SPR currently contains 351.3 million barrels of oil, 44% lower than it was in January 2021 when Biden took office and a level last recorded in September 1983 prior to this year.

Since taking office, Biden has ordered the Department of Energy to release a total of about 260 million barrels of oil stored in the SPR to combat high fuel prices that hit consumers in late 2021 and mid 2022. While the administration has recently initiated the process of refilling the emergency reserve, Republican lawmakers and energy experts have warned its actions make the U.S. vulnerable to short-term supply shocks.

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President Biden announces his first Strategic Petroleum Reserve release since taking office at the White House on Nov. 23, 2021. (Reuters/Evelyn Hockstein)

"There are a lot of reasons why the Biden administration should not have used the SPR to try to bring down prices — one of which is that the SPR then isn't available if something serious happens. We're facing that right now," Ben Lieberman, a senior fellow at the Competitive Enterprise Institute, told Fox News Digital in an interview. "The point was for the nation to have an emergency oil supply."

"And it's especially foolish given the backdrop of this administration's hostility to domestic oil production," he added.

Energy Secretary Jennifer Granholm said in March that it could take years to refill the emergency reserve to its previous level. (Alex Wong/Getty Images)

In addition, earlier this year, House Energy and Commerce Committee Chair Cathy McMorris Rodgers, R-Wash., and Senate Energy and Natural Resources Committee ranking member John Barrasso, R-Wyo., requested a Government Accountability Office investigation into how the administration's SPR releases may indirectly threaten national security.

"DOE’s mismanagement of the SPR has undermined America’s energy security, leaving the nation more vulnerable to energy supply disruptions, and increasing the ability for OPEC and Russia to use energy as a geopolitical weapon," the GOP leaders wrote.

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The SPR has a total capacity of 714 million barrels of oil and consists of four storage facilities in Texas and Louisiana. The 1975 Energy Policy and Conservation Act, which established the reserve, prohibits the release of any SPR stocks unless there is a severe domestic supply shortage, an act of sabotage or natural disaster.

Prior to 2021, the most recent SPR emergency release took place during another Middle East conflict, the Libyan civil war in 2011, when then-President Barack Obama tapped the reserves as Middle Eastern oil supplies were cut off. Before that, it was tapped during Hurricane Katrina in 2005 and the first Gulf War in the early 1990s.

The White House didn't immediately respond to a request for comment.