The Strait of Hormuz has been closed for 100 days. Why aren’t oil prices rising?

Last week, President Donald Trump has claimed that a secret US mission transported 100 million barrels of oil through the Strait of Hormuz during its blockade. This claim has reached an industry already consumed with questioning how much oil is actually being extracted, and no one seems to be able to answer that with confidence.

“No one has seen this kind of disruption,” said Matt Stanley, head of market engagement at Kpler, a commodity intelligence and ship tracking company. The reason numbers are so difficult to pin down is what the industry calls dark trade – ships that operate without their AIS transponders turned on, moving at night, close to the Omani border, sometimes with a naval escort.

There are ways to detect parts of the oil released anyway. Different grades of crude oil can only originate from specific fields. The UAE’s Murban crude can be exported via Fujairah outside the strait. Another type of ore, Upper Zakum, cannot. One oil market analyst noted that their team has witnessed the emergence of Upper Zakum crude in other markets. These sightings do occur, but their extent is still unknown.

Stanley says it is possible that 100 million barrels have crossed the Strait of Hormuz since May 1. “When you put it in context, pre-conflict, about 20 million barrels a day, five days’ worth of oil, were being moved in a normal traffic environment, and it takes more than a month. 100 million barrels, it’s a good number, but it’s a relative drop in the ocean, literally, compared to previous traffic.”

Why haven’t prices exploded yet?

The world’s most important oil corridor has been effectively closed for more than 100 days. World Trade Organization data show a 95 percent decline in crude oil shipments from Arabian Gulf ports and a 99 percent decline in liquefied natural gas tankers. The International Energy Agency described it as “the largest supply disruption in the history of the global oil market.” However, Brent crude oil is at $87.55 per barrel, the lowest level since before the conflict began.

This is because of buffers. China has roughly 1.3 billion barrels of inventory, drawing it down to about 1 million barrels per day, Stanley says. “We see their demand, about 7 million bpd in May, June and July. They were buying 12.5 million bpd in December.” The United States, Brazil, and Canada also stepped in to fill part of the void.

The three analysts interviewed agree that the oil market response has been strong. “The oil market has responded to this disruption very well in terms of cutting parts of demand,” says Eman Nasseri, managing director of the Middle East at FGE NexantECA, an energy and chemicals consultancy. “There is also a significant amount of inventory that has been released to the market, but we doubt they will continue to do so. We expect that by July.” [if the strait remains closed]”Things will change.”

The buffers will run out. Stockpiles are approaching what the industry calls operationally critical levels, where stored oil and additional supplies must be replenished, one analyst said. The United States, currently a swing producer, faces its own deadline as the end of the year approaches, and the United States will have to prioritize its domestic production to accommodate people who need to heat their homes, they added.

“People looking at October really think the problem will be solved by mid-August,” Stanley says. “And that’s what I think the market is hoping for.”

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Global oil supplies fell by 10.1 million barrels per day in March, with OPEC+ production falling by 9.4 million barrels per day on a monthly basis. The harder question is how much will come back and when.

Analysis by S&P Global CERA estimates restart timelines from 10 weeks to seven months for fields closed for two months. Fatih Birol, executive director of the International Energy Agency, said more than 80 energy facilities were damaged, and that recovery “could take up to two years.” The UAE National Oil Company estimates that full Hormuz flows will not resume until 2027.