Welcome to the latest edition of our Arbor Data Science Podcast. I am Kristen Radosh with Arbor Research & Trading. I am joined by Sam Rines, Macro Strategist at WisdomTree and a frequent contributor to Arbor Data Science. In today’s podcast, we revisit the Strategic Petroleum Reserve (SPR) and its significance during the on-going conflict in the Middle East.
Timestamps
0:00 Introduction
0:19 Significance of the SPR
4:02 What Will Move the Needle?
7:16 Comparing the SPR in Times of War
9:13 The UAE Exits OPEC
10:58 What Should We Be Paying Attention To?
11:52 Wrap-Up
Clips From Previous Episodes as Referenced in Today’s Podcast:
From Talking Data Episode #213: Oil: A Year After the Invasion (3/14/2023)
The US Strategic Petroleum Reserve is kind of a hammer to the market. It’s, it’s one of those threats that you can issue to oil producers both domestically and globally to say, hey, if you don’t, if you don’t increase output, we’re going to pump from the Strategic Reserve, and that’s going to hit oil prices regardless. And that’s always kind of been this kind of behind the scenes weapon that the US could use.
From Talking Data Episode #257: Oil Price Game (9/23/2023)
So how long does it take? It takes years. One of the things that we’ve seen with the SPR recently is that when they’ve decided that they want to buy oil, they’re buying about 3 million barrels at a time. They’re giving you a window to deliver it, and they want heavy US pumped crude, and that heavy US pumped crude is typically Gulf of Mexico crude. We do about 2, 2.5 million barrels a day of that. So it’s, it’s a pretty specific thing that they’re looking for, and that should not be ignored, that they are looking for a very specific type of oil. They’re doing this in a very methodical manner, and it’s going to take a very long time. We’ll be talking about this in 2026 and 2027.
From Talking Data Episode #225: Oil – Why the Grade Matters (5/11/2023)
You can’t put oil in while you’re pumping oil out. You just, you can’t physically do it. It’s also one of the things that is often overlooked. The SPR was intentionally designed to pump oil out quickly. But refill slowly, right? It was supposed to be an emergency when there’s, you know, a shock to the global oil market. The SPR can pump out very, very fast. It is not the case that they can put oil in very quickly. Think of it as maybe 30 to 400,000 barrels a day can go in, and you can pump out, call it 800 to a million-ish barrels a day without really breaking anything or causing the cavern destruction.
Mentioned Charts
