Strategic petroleum reserve

A strategic petroleum reserve is government-held crude oil stockpiled for release during a supply emergency, intended to cushion prices and buy time rather than serve as a trading tool.

A strategic petroleum reserve is crude oil that a government buys and stores specifically to be released during a genuine supply emergency, such as a war, a natural disaster, or a major producer’s output being knocked offline. It sits apart from commercial inventories held by refiners and traders for ordinary business reasons.

Releases from a strategic reserve are meant to add physical barrels to the market quickly, buying time for normal supply and demand adjustments to take over, rather than to manage the price on an ongoing basis. Because reserves are finite, a release cannot substitute for a genuine change in production, and reserves are typically refilled once the emergency passes, which itself adds a source of demand to the market. The United States holds the largest government-owned reserve of this kind.