US President Joe Biden waves before his departure to Saudi Arabia on Friday, July 15, 2022 (AP)

The United States is up against a new energy crisis as oil prices hiked a staggering 3 percent on Wednesday marking a ten-month high of over $94 per barrel.

These numbers were mainly driven by OPEC+'s previously announced decision to slash oil output, in addition to growing market fears over declining US oil stockpiles, or Strategic Petroleum Reserve (SPR), which have dropped over 250 million barrels in just one year - most recently recording a sharp decline the past two weeks.

New York-traded West Texas Intermediate (WTI) crude scheduled for November delivery closed at $93.68 per barrel on the official exchange market, up $3.29 or 3.7 percent, slightly down from a session peak of $94.14 - the highest since November 2022.

Meanwhile, London-traded Brent oil for December delivery raised $1.93 to reach $94.36, marking a 2.1 percent increase. The session peak was $94.78 - the highest for the global crude price since it hit $95.96 on September 19.

"The present move up is unequivocally led by scarce supply and actual inventory decline," said Tamas Varga of oil brokerage firm PVM.

All about Cushing

In the past three months, oil prices have risen over 30 percent since Saudi Arabia and Russia led a production cut announced by OPEC+.

Since mid-September, US oil inventory was drained by 2.2 million barrels - compared to analysts' expected 320,000 - as revealed by the Weekly Petroleum Status Report of the US Energy Information Administration (EIA). Crude stocks are now at 416.3 million barrels.

Alongside falls in crude stocks leading the headlines, the EIA noted a loss of 943,000 barrels last week at the Cushing, Oklahoma, hub, which acts as a primary distribution and storage point for US petroleum. The crude-watch institution reported a 2.064 million barrel Cushing shortfall for the previous week.

"It’s all about Cushing now, and not without reason, as it’s something that’s making the market very uncomfortable despite the seasonal drop in fuel consumption," John Kilduff, founding partner at New York-based energy hedge fund Again Capital, told Sputnik.

Cushing is strategically situated to draw barrels from the best US shale firms and Canada, and its many tanks are connected to pipelines that carry oil to Gulf Coast export ports as well as refineries on the American mid-continent and southern coast.

Energy-triggered inflation

Due to high export and processing demand, Cushing crude stockpiles fell to their lowest levels in 14 months. This has raised concerns about the quality of the remaining inventory and the possibility that it would slide below minimal operating volume, Reuters said citing analysts and experts.

Cushing's levels have plunged to just under 23 million barrels by September 15, the lowest since July 2022, according to government figures.

"Cushing inventory levels that are flirting near historical lows are driving WTI prices higher in an already tight market," said Rohit Rathod, market analyst at energy oil and gas research platform Vortexa.

Some analysts said that economic turbulence will likely manifest as energy-driven inflation places a heavy burden on global finances as WTI and Brent approach Saudi Arabia's crude target price of $100 per barrel.

Biden's reelection

Last year, the US President Joe Biden Administration sold excessive amounts of oil from the SPR - a time at which oil prices were the highest they had been since 2013 as they averaged nearly $95 per barrel.

This resulted in a severe internal backlash against the president - sending his reelection hopes further down the hill.

Washington has earlier announced plans to replenish its SPR as soon as possible, eyeing a price that would be "advantageous to taxpayers," as per US Energy Secretary Jennifer Granholm.

Biden's administration planned on refilling the reserves when oil prices were between $67-$72 a barrel, which was reached back in March, but as soon as the mark hit the desired price, OPEC+ announced a surprise further production cut, sending prices $5 higher per barrel.