Harold Hamm: US ‘unusually vulnerable’ to Middle East oil shock

Harold Hamm blames Joe Biden for decision to drain strategic petroleum reserve in recent years, writes ‘The Financial Times’.

US shale magnate Harold Hamm has accused the Biden administration of leaving the nation “unusually vulnerable” to a Middle East oil price shock by draining its strategic petroleum reserve, damaging domestic production and bungling foreign policy.

The Continental Resources founder told the Financial Times he was “very concerned” that Middle East conflict could disrupt global oil supplies while the US shale patch had been put in a “weakened condition”, unable to rapidly lift output. “They have drained the SPR, and refinery inventories are at their lowest in America [in years]. And you just never know when you need it. It’s kind of like having gas in your car,” said the billionaire shale boss. “We are in an unusually vulnerable position . . . everybody is looking in the direction [of the Middle East] right now — and has been for the last four years — but we had a president that frankly wasn’t at home.”

While strategic reserves have been drawn down, commercial inventories of crude and petroleum have surged 25 per cent over the past decade. Officials have been replenishing SPR reserves since June 2023, which now stand 10 per cent higher since then, at 382mn barrels. US oil and gas production has hit record highs under President Joe Biden, while crude and LNG exports have soared.

Hamm, a pioneer of the shale revolution, spoke to the FT shortly before Iran fired a barrage of missiles at Israel, a response to Israel Defense Forces’ ground offensive against Hizbollah in southern Lebanon. The Iranian attack sent oil prices up 5 per cent to $75.40 on Tuesday, amid fears of a wider conflict in a region accounting for about a third of global oil production capacity.

Geopolitical analysts have warned any conflict involving Tehran could threaten Gulf oil and gas exports through the Strait of Hormuz, a narrow chokepoint bordering Iran through which 20 per cent of the world’s crude supplies pass. Further fuel price rises would be uncomfortable for the Biden administration and vice-president Kamala Harris, who is running for the White House with a pledge to drive down the cost of everyday goods.

The White House began releasing oil from the SPR in 2021 — created in the wake of the Arab oil embargo in the early 1970s — ahead of the invasion in an attempt to keep down domestic petrol prices. It released another 180mn barrels of oil from the reserve in 2022 after sanctions on Russia brought fears of supply disruptions.

“It’s very important that we don’t crash this industry any further than the administration has crashed it already,” said Hamm, adding that he expected Harris to maintain curbs on the industry if she won the election in November.

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