Top shale boss says US ‘unusually vulnerable’ to Middle East oil shock

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US tycoon Harold Hamm accused the Biden administration of leaving the nation “unusually vulnerable” to a Middle East oil price shock by depleting the strategic oil reserve, damaging domestic production and confusing foreign policy.

The founder of Continental Resources told the Financial Times he was “very concerned” that conflict in the Middle East could disrupt global oil supplies, while US shale has been put in a “weakened state”, unable to grow fast production.

“They’ve drained the SPR and refinery inventories are at the lowest level in America (in years). And you just never know when you need it. It’s like having gas in your car,” said the billionaire shale boss.

“We are in an unusually vulnerable position. . . everybody’s looking in the (Middle East) direction right now — and has been for the last four years — but we’ve had a president who, quite frankly, wasn’t at home.”

The comments by Hamm, a prominent donor to Republican candidate Donald Trump’s candidacy, echoed campaign comments by the former president, who accused the Biden administration of waging a “war on American energy” and bringing the US to “the brink of World War III world”. “.

Hamm, a pioneer of the shale revolution, spoke to the FT shortly before Iran launched a missile barrage on Israel, a response to the Israel Defense Forces’ ground offensive against Hezbollah in southern Lebanon.

The Iranian attack sent oil prices up 5 percent to $75.40 on Tuesday amid fears of a wider conflict in a region that accounts for about a third of global oil production capacity.

Geopolitical analysts have warned that any conflict involving Tehran could threaten Gulf oil and gas exports through the Strait of Hormuz, a narrow bottleneck on Iran’s border through which 20 percent of the world’s crude supplies pass.

Further increases in fuel prices would be inconvenient for the Biden administration and for Vice President Kamala Harris, who is running for the White House on a pledge to lower the cost of everyday goods.

U.S. gasoline prices average about $3.40 a gallon, down about a third from their price since mid-2022, when a surge in crude oil markets after Russia’s invasion of Ukraine drove up fuel costs.

The Biden administration began releasing oil from the US SPR in 2021 — which was created following the Arab oil embargo of the early 1970s — before the invasion in an attempt to keep domestic gasoline prices up.

It released an additional 180 million barrels of oil from reserves in 2022 after sanctions against Russia raised fears of supply disruptions.

The U.S. has bought some of the oil, but still has 382 million barrels — about half the capacity — left in the SPR, enough to meet about 19 days of consumption, according to the U.S. Energy Information Administration.

Hamm also accused the Biden administration of trying to restrict American investment in oil and gas through “short-sighted” policies, including limits on drilling and a pause on new liquefied natural gas plants, compromising energy security in a moment of growing geopolitical risk.

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

A US official pushed back against Hamm’s criticism of the Biden administration, saying the US had played an active role in ensuring that conflicts overseas did not affect Americans.

“We have done this by accelerating the energy transition, on the one hand reducing demand for fossil fuels in the process and making strategic releases from the SPR,” the official said.

“People said this would destroy the market, but it didn’t. People said then that we would have $100 oil this year, but we didn’t. People said we won’t be able to fill the SPR. But we fill the SPR. We put a plan together in January 2022 and stuck to it despite all the dire predictions.”

US oil and gas production reached record levels under President Joe Biden, while crude oil and LNG exports increased.

Kevin Book, managing director of ClearView Energy Partners, said the U.S. was in a better position now to deal with supply disruptions than in the 1970s, when some Arab OPEC members imposed an embargo on crude oil shipments to western countries, which triggered a sharp rise in prices.

“We’ve removed a lot of hatches,” he said, giving the U.S. “limited industrial exposure to high crude oil prices.”