SINGAPORE/VIENNA (Reuters) - President Donald Trump’s proposal to sell half of the U.S. strategic oil reserve highlights a decline in the biggest oil user’s reliance on imports - and a weaning off OPEC crude - as its domestic production soars.

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson/File Photo

The U.S. Strategic Petroleum Reserve (SPR) SPR-STK-T-EIA, the world's largest, holds about 688 million barrels of crude in heavily guarded underground caverns in Louisiana and Texas.

Congress created it in 1975 after the Arab oil embargo caused fears of long-term spikes in motor fuel prices that would harm the U.S. economy.

The White House budget, delivered to Congress on Tuesday, proposes to start selling SPR oil in fiscal 2018, which begins on Oct. 1. Under the proposal, the sales would generate $500 million in the first year and gradually rise over the following years.

A release of half the SPR over 10 years equals about 95,000 barrels per day (bpd), or 1 percent of current U.S. output.

The drive to reduce the SPR started under former President Barack Obama, and several sales were approved in legislation from 2015 and 2016.

In December, Congress approved the sale of $2 billion of crude over three years from the SPR for maintenance and repairs. The U.S. Department of Energy sold 6.4 million barrels in January and another 10 million in February.

The United States has more leeway to release SPR crude now, as its production C-OUT-T-EIA has risen 49 percent over the past five years.

Although the figure is equivalent only to the output of a mid-sized field, it sends a powerful signal about the United States’ decreasing need for imports as its own production reaches new highs.

The International Energy Agency, which counts the United States as a member, requires member countries to keep strategic stocks equal to 90 days of the previous year’s net oil and product imports.

As of October 2016, the United States had about 145 days worth of import coverage, according to the U.S. Energy Information Administration.

Since the U.S. shale oil boom began at the start of this decade, imports have fallen sharply - sometimes dropping to as low as 7 million bpd from as high as 10 million bpd in the middle of the last decade.

“The United States definitely doesn’t need as much SPR as they have now lower imports,” said Amrita Sen of the consultancy Energy Aspects.

“While the headlines may be bearish, not only is this just a proposal that is unlikely to make it past Congress, it is also phased over 10 years ... So we do not see this as bearish for fundamentals even though the headlines won’t help,” she added.

Under the proposal, sales would peak at $3.9 billion in 2027, and total nearly $16.6 billion from 2018 to 2027, the administration said.

PVM brokerage said the plan, if implemented, would not add dramatically to global oversupply.

Benchmark Brent LCOc1 and U.S. light crude CLc1 prices settled about 0.5 percent higher on Tuesday, having recouped earlier losses of around 1 percent on the news of Trump's proposal.

The Organization of the Petroleum Exporting Countries, of which the United States is not a member, meets this week, and is widely expected to extend production cuts by nine months to March 2018 to help the market rebalance.

The United States released supplies from the SPR at the start of the Gulf War in 1991 and after Hurricane Katrina disrupted Gulf of Mexico output in 2005, and again in 2011 amid concerns about lost Libyan supply.

The White House proposal would also open areas of Alaska’s arctic region to exploration, potentially helping the United States further boost production.