by Bryan Perry
August 18, 2026
U.S. energy independence has shifted from a long-term strategic policy to an immediate national security and economic imperative, due to the military conflict with Iran. The central vulnerabilities of the global energy system, and continued U.S. self-sufficiency are critical to the future of America’s energy needs.
Roughly 20% of the world’s petroleum and Liquefied Natural Gas (LNG) passes through the narrow Strait of Hormuz. The war involving Iran has exposed this vital transit route to blockades, missile strikes, and maritime mine warfare, creating immediate physical shortfalls, regardless of global production levels. Currently, control over the Strait of Hormuz is disputed and contested – involving Iran, Oman and the international coalition forces led by the United States. No single authority exercises undisputed control.
Oil is a major cost for nearly every industry, including transportation, fertilizers, manufacturing, and utilities. When Middle East crude supplies are threatened, global oil prices surge, driving up everyday consumer inflation and raising risks of stagflation across major economies. As of last Friday, WTI crude was trading at $82.40 per barrel, well off the highs set in April but high enough to impact the consumer.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
The U.S. national average price for regular unleaded gasoline according to GasBuddy is $4.07 per gallon. As of August 14, the U.S. Strategic Petroleum Reserve (SPR) currently stands at 298.69 million barrels (roughly 41.8% of capacity), representing its lowest inventory level since 1983. The SPR reached its historic peak around 2010, when it held roughly 726.6 million barrels of crude oil.
The SPR experienced its first multi-year drop when the Biden administration authorized a record 180-million-barrel emergency release to offset energy shocks following Russia’s invasion of Ukraine. By late 2022, levels hovered around 375 million barrels. Emergency releases continued this year, to mitigate global supply losses and surging pump prices stemming from the military Iran war. Inventories dropped from 415 million barrels in March 2026 to under 300 million barrels, down -26% from this time last year.
Graphs are for illustrative and discussion purposes only. Please read important disclosures at the end of this commentary.
Energy independence, or lack thereof, often weighs on foreign policy and security decisions against the immediate risk of fuel shortages. Achieving energy independence for the U.S. allows for the ability to navigate diplomatic conflicts without fearing retaliatory supply cuts or regional extortion.
At present, U.S. crude oil production is averaging an all-time high of approximately 13.8 million barrels per day (bpd). The U.S. remains the world’s largest oil producer, outproducing Saudi Arabia and Russia. Total domestic commercial crude inventories (excluding the SPR) hover around 424 million barrels, showing domestic production is comfortably supplying current refinery demand with a surplus.
The key reason high crude oil supply doesn’t immediately lower gas prices is knowing crude must go through complex oil refineries. Refineries operate under strict physical capacity limits. When refinery margins and processing costs, called the crack spread, remain elevated due to operational maintenance, summer blend requirements, or high energy costs, wholesale gasoline stays expensive regardless of how much raw crude is sitting in storage tanks. The U.S. needs to greatly increase refining capacity to resolve this decades-long problem. But building any new domestic refineries has been akin to political kryptonite.
Oil and refined fuels are globally traded commodities. Severe shipping disruptions or military conflicts overseas (such as blockades in the Strait of Hormuz) push up international energy prices immediately. Because U.S. energy producers export crude and fuel abroad to capture higher global prices, domestic prices stay tied to international benchmarks rather than staying cheap at home.
As for the Department of Energy’s (DOE) strategy for refilling the Strategic Petroleum Reserve, it relies on a combination of direct price-cap purchases, return premiums on exchanges, and legislative funding updates. Middle East supply fears and regional conflicts have triggered renewed emergency SPR releases to stabilize market supply, temporarily pausing or offsetting buyback schedules.
The DOE actively buys crude for the SPR only when market prices trade below $79 per barrel (ideally $70–$75). When crude trades above this range due to geopolitical risk premiums, buyback tenders are halted to avoid bidding prices up further for everyday consumers. And the SPR contains both sweet (light/low-sulfur) and sour (heavy/high-sulfur) crude. Much of the new growth in U.S. shale production is in light-sweet crude, whereas the reserve, and many Gulf Coast refineries, requires specific blends of heavy-sour crude, thereby creating refinery quality mismatches. Again, the need for new modern refineries would do much to resolve the shortages of gasoline, diesel, jet-fuel, and lubricants.
The U.S. energy sector produces plenty of oil to meet SPR refill needs. The primary bottleneck is not a lack of domestic oil production, but rather market prices sitting above official buyback targets and the ongoing need to use the SPR to buffer global geopolitical supply shocks sending oil prices soaring.
Reliance on domestic energy sources, whether crude, shale gas, nuclear, or renewables, ensures home industries, technology infrastructure (i.e., data-centers), and utility grids remain operational even during severe foreign supply shortages. One major takeaway from the past five-years of dealing with foreign wars halfway around the world shows true domestic energy independence is elusive
All content above represents the opinion of Bryan Perry of Navellier & Associates, Inc.
Also In This Issue
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Inflation Remains Tame, for Now
Income Mail by Bryan Perry
Probing the Complexities of Domestic Energy Policy
Growth Mail by Gary Alexander
Five Big Financial Surprises in the Last 25-Years
Global Mail by Ivan Martchev
The Global Bond Boomerang Effect
Sector Spotlight by Jason Bodner
Seeing the Unseen – A Source of Superior Market Profits
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Bryan Perry
SENIOR DIRECTOR
Bryan Perry is a Senior Director with Navellier Private Client Group, advising and facilitating high net worth investors in the pursuit of their financial goals.
Bryan’s financial services career spanning the past three decades includes over 20-years of wealth management experience with Wall Street firms that include Bear Stearns, Lehman Brothers and Paine Webber, working with both retail and institutional clients. Bryan earned a B.A. in Political Science from Virginia Polytechnic Institute & State University and currently holds a Series 65 license. All content of “Income Mail” represents the opinion of Bryan Perry
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