A former advisor to President Trump, George Papadopoulos, recently stated that the US government's plan to utilize the Strategic Petroleum Reserve may indicate the conflict with Iran is set to be prolonged rather than resolved quickly. He noted that the Strategic Petroleum Reserve is typically deployed only during extreme crises or protracted wars. The US-Iran conflict has now entered its fourth week, with shipping disruptions continuing in the Strait of Hormuz and global oil prices remaining volatile at elevated levels. The signal sent by tapping into the strategic reserve has intensified market concerns about a drawn-out conflict. During European trading hours on Thursday, March 26, US crude oil prices trended higher, trading around $93 per barrel with an intraday gain of approximately 3%.
The core viewpoint of the former advisor is that the current US Strategic Petroleum Reserve might only be sufficient to sustain the market for one month or even less. He emphasized that deploying this reserve is a "very serious decision," usually signifying the government's preparedness for longer-term risks of energy supply disruptions. He pointed out that the US does not want the conflict with Iran to extend beyond three months, as such a scenario would not align with the interests of the US, Europe, or Israel. A three-month timeframe is viewed as the ultimate limit for US involvement in this type of conflict; exceeding it could trigger domestic political and economic pressures.
Regarding the plan to release oil from the reserve, US Energy Secretary Chris Wright previously announced an intention to release approximately 170 million barrels from the Strategic Petroleum Reserve, with plans to replenish up to 200 million barrels within a year. While the specific timing for the release has not been finalized, completing a release of this scale is estimated to take about 120 days. This plan aims to alleviate global energy supply tightness caused by the Iran conflict, but it has also led markets to interpret it as a sign that the conflict might be prolonged. Papadopoulos believes this move reflects the US government's high priority on energy security while also hinting at a pessimistic outlook for a swift resolution to the conflict.
Regarding the expected duration of the conflict, Papadopoulos stated that the US government hopes to bring the conflict under control and resolve it within three months. If the conflict drags on beyond this timeframe, it could adversely affect the domestic political situation ahead of the US midterm elections, while also increasing fiscal and military burdens. He noted that although the Trump administration has sent diplomatic signals, Iran's hardline stance makes negotiations difficult, and the risk of a prolonged conflict remains.
The deployment of the Strategic Petroleum Reserve will directly impact global oil price trends. If the release proceeds smoothly, oil prices could face downward pressure in the short term. However, if the conflict extends, supply tightness could re-emerge after the reserve release concludes, potentially driving energy costs higher again. Domestically for the US, while releasing reserves can temporarily stabilize the market, long-term reliance on reserves is not a sustainable strategy and could weaken the strategic energy security buffer. Furthermore, a prolonged conflict would increase military expenditures and put pressure on the Trump administration's political image ahead of the midterm elections.
In the short term, markets will closely monitor the actual timing and scale of the US Strategic Petroleum Reserve release. If the release plan advances smoothly, oil price volatility may moderate. Conversely, if the Iran conflict escalates further, oil prices could experience significant swings again. From a medium to long-term perspective, whether the conflict can be effectively contained within three months will be a key variable determining stability in the global energy market and the trajectory of the US economy. Investors should pay attention to subsequent announcements from the US Department of Energy, official statements from Iran, and oil price movements, as geopolitical risk remains the dominant uncertainty factor.
As of 15:20 Beijing time, US crude oil continuous contract was reported at $93.06 per barrel.