Trump not afraid of oil prices? Reports say the U.S. is not considering releasing strategic oil reserves, while OPEC+ is considering increasing production

U.S. and Israel Launch Military Strikes on Iran, Global Energy Markets Tighten Suddenly. Washington Shows Confidence with Silence—Strategic Reserves Not Yet Used; OPEC+ May Act Proactively to Increase Production and Stabilize Markets.

According to the Financial Times, a U.S. Department of Energy official stated that the U.S. government has “not discussed” using the Strategic Petroleum Reserve (SPR) in response to potential oil price increases from this military action. This indicates that Washington believes the impact on oil prices will be manageable. Meanwhile, Bloomberg reports that two OPEC+ representatives revealed that the upcoming Sunday meeting will consider significantly expanding production.

The biggest current uncertainty lies in the Strait of Hormuz. According to Xinhua, Iranian media reported Saturday that the Islamic Revolutionary Guard Corps has warned that some ships are unsafe to pass, and the strait has been “effectively” closed. This narrow waterway carries about 20% of global oil supplies; if closed, any release from reserves would be insufficient to fill the gap.

Strategic Reserves: Tools at Hand, Holding Steady

The U.S. Strategic Petroleum Reserve currently holds about 415 million barrels. Historically, the SPR has been used multiple times to stabilize prices during crises—after the Russia-Ukraine conflict erupted in 2022, the U.S. released reserves on a large scale. However, officials from the Department of Energy have explicitly stated that no such discussions are underway this time.

Kevin Book, Director of Research at the Washington think tank ClearView Energy Partners, pointed out that the SPR still has ample supply in emergencies, but “when it comes to strategic reserves, duration and scale matter. A full-scale crisis in the Strait of Hormuz could exceed the buffer provided by U.S. and IEA member reserves.”

The limitation of the SPR is its effectiveness in short-term shocks; if the crisis prolongs or expands, its role diminishes. This also explains why analysts are focusing more on OPEC+'s actions.

OPEC+ Emergency Meeting: Production Increase May Be Larger Than Expected

Bloomberg reports that OPEC+ was originally scheduled to approve a 137,000 barrels per day increase in April—consistent with the pace of the last quarter of last year.

But after this military conflict, the situation has changed dramatically. An informed source said that member countries might approve an increase three to four times that amount.

Reports indicate that Saudi Arabia has recently accelerated crude exports in preparation for potential emergency supplies. During last year’s U.S. strikes on Iran’s nuclear facilities, Saudi Arabia also temporarily increased output.

However, capacity constraints are real.

According to IEA data, Saudi Arabia has the world’s largest remaining spare capacity, capable of adding about 1.8 million barrels per day; the UAE reportedly has emergency plans to deploy at least 1 million barrels per day of additional capacity.

Helima Croft, Head of Commodity Market Strategy at RBC Capital Markets, warned: “No matter how large an increase OPEC+ announces, they may need to draw on reserves to fulfill commitments because spare capacity is extremely limited and concentrated almost entirely in Saudi Arabia.”

Additionally, Jeff Currie, Chief Strategist for Energy at Carlyle Group, pointed out that market expectations of oversupply may be mistaken. He said, “The market’s pricing is based on an ‘oversupply’ assumption, which is largely fictitious. There is no margin for error, which means there is significant upside potential.”

Hormuz: The Core Variable of Systemic Risk

The greatest threat to energy markets from this conflict comes from the Strait of Hormuz.

According to Xinhua, the Iranian Revolutionary Guard has issued warnings about passage safety, with Iranian media claiming the strait has been “effectively” closed. Ship responses on MarineTraffic show a decline in large commercial vessel traffic, especially westbound into the Gulf.

Meanwhile, Yemen’s Houthi forces—closely linked to Iran—have announced a resumption of attacks on ships in the Red Sea route, further increasing regional energy transportation risks. Iran’s semi-official Mehr news agency reported an explosion at the important oil export hub of Kharg Island but provided no details.

Analysts: $100 Oil Price May Be Difficult to Achieve

Despite rising market tensions, most analysts believe that a breakthrough above $100 per barrel remains relatively unlikely.

Michael Alfaro, Chief Investment Officer at hedge fund Gallo Partners, said oil prices will spike briefly, “but not beyond $100 because OPEC+ may announce emergency increases.”

Kevin Book also noted that this conflict could prompt the eight OPEC+ countries planning to increase output to do so more aggressively at Sunday’s meeting, “today’s hostilities could push for larger supply increases.”

Negotiations are not fully closed yet. Just two days before the military actions, the U.S. and Iran completed their third round of nuclear talks in Switzerland. However, Trump expressed dissatisfaction with the progress on Friday, while Iran claimed to have retaliated against U.S. military bases in the UAE, Bahrain, Qatar, and Kuwait. The conflict’s trajectory remains highly uncertain and will be a key variable influencing market movements.

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