US taps strategic petroleum reserve, releasing 4 million barrels after hurricane isaias disruption

The United States on Saturday (Oct 10) authorised the release of up to four million barrels of crude oil from its strategic reserves to offset supply disruptions caused by storm Isaias in the country's southeast. Under the "emergency exchange," ExxonMobil and BP American can each receive up to two million barrels to help keep their refineries running, Energy Secretary Chris Wright said in a statement issued by the Department of Energy.

Both companies must return the crude to the Strategic Petroleum Reserve (SPR) in 2027. They will also have to add a "premium" amount beyond what they borrowed, the department said.

Isaias made landfall in Florida on Friday (Oct 9) as a Category 2 hurricane. It has severely disrupted oil production in the US Gulf Coast region. A personnel had been evacuated from 129 production platforms, about a third of the facilities in the Gulf of Mexico, according to a federal agency. More than two-thirds of Gulf oil production was shut down as a precaution, equal to almost 1.5 million barrels a day.

Also read: Hurricane Isaias makes landfall in Florida as Category 2 storm with winds of 105mph, threatens Gulf Coast with life-threatening surge

Chevron, BP and Shell were among the companies that shut platforms and evacuated staff. Industry experts said the storm could still nudge fuel prices higher if power outages shut refineries, though some said any impact on gasoline prices would be minimal and mostly regional.

Also read: Hurricane Isaias shatters a 121-year-old record - Landfall and other details

The SPR was already being drawn down before the storm. Energy markets were shaken by the US war with Iran, and the reserve has fallen to its lowest level since 1982.

Since the United States and Israel launched strikes on Iran in late February, 132 million barrels have been withdrawn from the 415 million held in reserve. Washington has pledged to gradually release a total of 172 million barrels.