We are now on the edge of a full-blown collapse.
Energy Boom
September 17 (King World News) – The Kobeissi Letter: Energy stocks are thriving:
The S&P 500 Energy sector has gained +7.98% over the last month, making it the best-performing S&P 500 sector.
KING WORLD NEWS NOTE: Last Month Energy Stocks Were By Far The Best Performing Sector
Meanwhile, Communication Services is the only other sector with a positive return over this period, up +1.28%.
By comparison, Healthcare, Financials, and Consumer Staples are down -0.45%, -2.40%, and -2.68%, respectively.
The worst-performing sectors are Industrials, Consumer Discretionary, and Utilities, at -9.13%, -6.43%, and -6.18%, respectively.
Energy is the only place where the market is showing strength right now.
What A Collapse
The Kobeissi Letter: BREAKING: The Strategic Petroleum Reserve (SPR) fell -403,000 barrels last week, to 285 million barrels, its lowest since November 1982.
KING WORLD NEWS NOTE: US Strategic Petroleum Reserve Has Collapsed To Lowest Level Since 1982!
This marks the 25th consecutive weekly decline, the longest streak since the 2021-2023 period.
Over this time, US oil inventories in the SPR have dropped -131 million barrels, or -46%.
To put this into perspective, oil reserves in the SPR stood at 650 million barrels in 2020, or +128% above the current levels.
Meanwhile, commercial crude oil stocks excluding the SPR declined -640,000 barrels last week, to 423.4 million barrels, the lowest reading since the end of July.
America’s oil reserves are running dangerously low…
Listen to the greatest Egon von Greyerz audio interview ever
by CLICKING HERE OR ON THE IMAGE BELOW.
Crisis
Gerald Celente: The oil in the U.S. Strategic Petroleum Reserve (SPR), an array of 60 underground salt caverns along the Texas and Louisiana coasts, is approaching dangerously low levels.
In 2022, President Joe Biden oversaw a release of 230 million barrels of oil when petroleum prices spiked after Russia invaded Ukraine. Those barrels were only partially replaced.
The U.S. joined the 31 other member nations of the International Energy Agency (IEA) in coordinating a 400-million-barrel release of global reserves after the Iran War sent oil prices into the stratosphere. Donald Trump authorized a gradual release of as much as 172 million barrels from the SPR.
Now the reserve, created in the 1970s after the Arab nations’ oil embargo, is down to 289.7 million barrels, the least since 1982, according to the IEA.
Trump now faces the decision of whether to release the final 39 million barrels remaining of his 172-million-barrel commitment. Experts hope he will not.
The oil in the caverns is floating on water. As more oil is drawn out of the caverns, the water level rises. The water can erode the caverns’ walls and damage the pumps and piping needed to pull out the oil.
The minimum level of oil in the caverns needed to maintain the SPR’s integrity is 250 million barrels, experts have calculated. If Trump pulls out another 39 million, the level will fall to 250.7 million, threatening perhaps irreversible damage to the reserve.
“The core mission of the reserve is to supply the market rapidly during a crisis,” petroleum engineer Siddharth Misra at Texas A&M University told Reuters. “Operating below 250 million barrels pushes the infrastructure into a dangerous zone.”
Trump’s SPR releases have taken the form of loans to oil companies. The companies must return the volumes of oil they “borrowed” and pay interest in the form of about 40 million additional barrels of oil – about a two-day supply for the entire U.S.
The paybacks are not scheduled to begin until later this year and are not expected to be completed until late in 2028.
Trump also has said the SPR will be replenished with Venezuelan oil. However, no details or agreement with Venezuela has been announced as to how that would take place.
No matter where the oil comes from, rebuilding the reserve to its full 714-million-barrel capacity will take years, analyst Kevin Book at ClearView Energy Partners wrote in a note. The process also could be interrupted by upheavals in Venezuela, geopolitical events requiring other withdrawals, or politicians’ choices, he noted.
In 2025, Congress budgeted $171 million to replenish the reserve, enough to buy about 280 million barrels at prices current at the time.
However, “the SPR’s drawdown, distribution, and fill capabilities are currently limited and are at risk going forward due to longstanding issues with aging infrastructure compounded with ongoing major construction intended to address them,” the GAO said.
“Once inventories are for all practical purposes exhausted, demand destruction becomes the only response to a shortage of oil,” Lutz Kilian, head energy issues at the Federal Reserve Bank of Dallas, said to Reuters.
TRENDPOST:
Trump’s Iran War has depleted both U.S. defense material and U.S. oil reserves, endangering the nation’s energy supply in a future crisis as well as its ability to defend itself.
The U.S. will need to be on heightened alert for foreign threats to these two pillars of national security. However, the Trump administration has gutted intelligence agencies that would safeguard the country against such threats.
The U.S. is especially vulnerable to external threats at a time it is least able to defend against them.
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