U.S. oil stockpile withdrawals filled roughly half the global supply shortfall in the second quarter of 2026, helping restrain prices during the Middle East conflict, the Federal Reserve Bank of New York said.
U.S. inventories stopped falling in July, leaving other countries to cover the continuing shortage, Thomas Klitgaard wrote in “The U.S. Oil Sector’s Role in Restraining Prices,” published Nov. 5 in Liberty Street Economics.
Klitgaard, an economic policy advisor at the bank, examined production, consumption, inventories and trade, tracing U.S. output since 2010 and the supply disruption through September. His views do not necessarily represent the bank’s position.
The U.S. Energy Information Administration’s estimates put September global liquid fuel production at 101 million barrels a day and consumption at 104 million. Klitgaard said the difference implied inventories fell by 3 million barrels a day.
Government stocks released through the Strategic Petroleum Reserve, an emergency oil stockpile, supplied 1 million barrels a day in the second quarter, Klitgaard said. Commercial stocks supplied another 700,000 barrels a day, against an estimated global inventory decline of 3.5 million barrels a day.
The withdrawals helped raise U.S. net exports by 2.5 million barrels a day in the second quarter, the analysis said. Exports rose by 2 million barrels a day while imports fell by 500,000, making more oil available abroad.
U.S. inventories stayed relatively flat through September, and the third-quarter net export balance returned close to its first-quarter level, Klitgaard said. He linked China’s sharp import cuts since April to what he described as withdrawals from its oil stocks.
Higher production before the conflict also helped absorb the disruption, the analysis said. Global inventories grew by an average 2 million barrels a day in 2025 and 4 million in early 2026, before production collapsed by 12 million in March.
Klitgaard put U.S. crude oil and other liquid fuel output at 21 million barrels a day in 2025, up from 8 million in 2010. The United States supplied 70% of the global production increase over that period, he said.
The repeal of restrictions on crude exports in 2015 helped sustain that expansion, Klitgaard said. Petroleum exports subsequently increased by 6 million barrels a day through 2025, while imports fell by 2 million.
Producers had little ability to respond immediately to the conflict because they lacked spare capacity, he said. The Energy Information Administration forecast U.S. output growth of 700,000 barrels a day in 2026, below the annual increases in 2024 and 2025.
Klitgaard said restored Middle East output could bring back excess supply and lower prices, although rebuilding stockpiles could delay a return to pre-conflict prices. If the shortage persists, inventories would eventually fall too low and consumption would have to match production, he said.
