The Grand Failure in the Middle East

Today, I asked Grok to draw a figure on the development of the U.S. Strategic Petroleum Reserve (SPR). It should worry us all.

Remember what Tracy Shuchart noted in her excellent piece, which I summarized on Wednesday:

The reserve can lose functional capability at 350 million barrels of headline inventory if the wrong caverns are cycled the wrong way, and it can hold together well below 200 million if the remaining draws are distributed according to Sandia’s per cavern budget.

In other words, we are now in the zone, where the crude supply from the SPR can suddenly collapse. While we can consider the likelihood of such a scenario being low, it is definitely greater than zero. Moreover, if (when) we move below the 200 million barrel mark, the technical hard floor will start to approach rapidly, and no one knows exactly where it is.

Yesterday, Iran announced that it will not negotiate with President Trump’s administration anymore but will wait until the end of his term. Brett Erickson pointed out in X that Iran cannot endure the blockade for 2.5 years, but that is also not the main issue.

The point, like Brett notes, is that Iran most likely can outlast the U.S. in any economic game scenario. As the figure above showed, the SPR concurs with this assessment.

At this rate, the SPR will reach the critical 200 million barrels threshold sometime in early November and the absolute technical hard floor of about 70 million barrels in early April.1 However, the hard floor is actually likely to be much closer to 100 million barrels, which the U.S. would reach in February (at this rate). The White House is running out of time, fast.

The math simply does not concur with the “economic pressure” campaign announced by President Trump yesterday. Or, to put it another way, Iran is the one asserting economic pressure on the U.S. (and the rest of the world) through the White House.

President Trump’s announcement on “winning Iran” through economic coercion is nothing more but a desperate act. All viable military options have been used and after each escalation cycle, the U.S. military assets in the Middle East are in a worst shape than they were prior the cycle. The only military option remaining is a ground invasion which would very likely end to a catastrophic defeat and the loss of Americans lives in the thousands. The economic coercion is touted by the President, because he cannot admit defeat publicly. Not at this point, at least.

The anticipated drawdown from the SPR indicates that something needs to give in the U.S. energy system soon (unless President Trump fully capitulates.) The 3-2-1 Crack Spread agrees.