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As the conflict in Iran intensifies with no immediate end in sight, the U.S. Department of Energy is tapping further into the nation’s emergency oil supply.
On Wednesday, officials announced a plan to loan an additional 10 million barrels of crude oil from the Strategic Petroleum Reserve (SPR) — part of a 172 million-barrel drawdown that critics say could leave the U.S. vulnerable as West Texas Intermediate (WTI) crude prices climb past $111 per barrel.
The crude oil is set to be extracted from the Bryan Mound site in Texas, and the department is also accepting proposals from oil companies until Monday.
STATE-BY-STATE VIEW OF GAS PRICES AS IRAN WAR PUSHES OIL MARKETS HIGHER
The latest move is part of an agreement with 32 other countries to release a total of 400 million barrels of oil from reserves. The International Energy Agency (IEA) held an emergency meeting at its Paris headquarters last month with energy representatives from the G7 countries to “assess market conditions,” which IEA Executive Director Fatih Birol says “have been significantly affected by the conflict in the Middle East.”
“The oil market challenges we are facing are unprecedented in scale. Therefore, I am very glad that IEA member countries have responded with an emergency collective action of unprecedented size,” Birol said after the announcement about the release of the emergency oil reserves.
The Department of Energy did not immediately respond to Fox News Digital’s request for comment, but in a press release, it said the replenishment of the SPR will come “at no cost to the American taxpayer.”
Analysts at Goldman Sachs warned in recent weeks that the 400 million-barrel release, the largest in history, may be insufficient to cover supply disruptions caused by the closure of the Strait of Hormuz, potentially leading to a shortfall of more than 10 million barrels per day.
As of early Friday afternoon, WTI — the U.S. standard for oil prices — topped $112 per barrel, up slightly from the previous day. The national average for a regular gallon of gas is over $4, up more than $1 since the war began, according to AAA.
Federal Reserve Bank of New York President John Williams warned that the effects of the Iran war on energy prices could spread across several sectors of the economy during an interview on “The Claman Countdown” Thursday.
“There’s a pass-through of energy prices into a lot of things that we buy, including airfares. … With higher fuel costs, airfares are going to go up,” Williams said. “It will spread around. It typically takes us into other goods and services. That typically takes months or maybe a year to have that full effect.”
In a presidential address to the nation Wednesday evening, President Donald Trump indicated that military operations in Iran will continue for weeks, likely adding more pressure to the oil market.
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Fox News’ Alec Schemmel and FOX Business’ Nora Moriarty contributed to this report.
