The Strait of Hormuz has been closed for 100 days. Why are oil prices not rising?

Last week, President Donald Trump said that the US secret service moved 100 million barrels of oil across the country Hormuz River when it was closed. The claim came in an industry that had already been consumed by the question of how much oil is coming out-and no one can confidently answer.

“No one has ever experienced this kind of disruption,” said Matt Stanley, chief marketing officer at Kpler, a business intelligence and fleet research firm. That’s why these numbers are hard to pin down with what the industry calls dark trading – takeovers running without their AIS transpondersmoving at night, close to the Omani border, sometimes with a naval escort.

There are ways to determine the oil levels that are coming out. Different types of crude oil come from different parts. The UAE’s Murban crude can be exported via Fujairah, outside the strait. Another brutal type, Upper Zakum, can’t. An oil market analyst said his team has seen Upper Zakum oil appearing in other markets. The phenomenon is happening, but its magnitude is unknown.

Stanley says it is possible that 100 million barrels have passed through the Strait of Hormuz since the beginning of May. “If you put it into context, before the war, it was about 20 million barrels a day, so five days’ worth of fuel, in normal conditions, and it would last a month. 100 million barrels, that’s a good number, but it’s a bit of a drop in the ocean, really, compared to the previous trucks.”

Why Prices Aren’t Going Up Yet

The world’s most important oil refinery has been effectively shut down for more than 100 days. World Trade Organization data shows a 95 percent drop in crude oil from Arabian Gulf ports and a 99 percent drop in natural gas shipments. The International Energy Agency said he called it “The biggest shock in the history of the global oil market.” However, Brent crude remains at $87.55 per barrel – the lowest since before the war.

This is because of buffers. China has about 1.3 billion barrels in storage, drawing down about a million barrels a day, Stanley says. “We see their willingness, about 7 million barrels per day from May, June, and July. They were buying 12.5 million barrels per day in December.” The US, Brazil, and Canada have also stepped in to resolve the issue.

The three analysts interviewed agree that the response of the oil market has been strong. “The oil market has reacted to this crisis well by reducing demand,” said Iman Nasseri, managing director, Middle East of FGE NexantECA, an energy and chemical consulting firm. “There are still a lot of products that have come to the market, but we suspect that they will continue to do this. We hope that by July (if the problem is closed), things will change.

Supplies will last. One analyst said the stock is approaching what the industry calls a critical point — where oil reserves and other supplies need to be replenished. He said that the US, which is acting as a swing producer, is facing its own period at the end of the year, and the US should prioritize its domestic production to help people who need to heat their homes.

“People who are looking at October, they think it’s going to be over by the middle of August,” Stanley said. “That’s what I think the market is waiting for.”

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Oil all over the world he fell 10.1 million barrels per day in March, OPEC+ production fell by 9.4 million barrels per day month on month. The most difficult question is how much to return, and when.

The S&P Global CERA analysis estimates a recovery period of 10 weeks to seven months for fields closed for two months. IEA Director General Fatih Birol he said more than 80 power stations have been destroyed, and recovery “may take two years.” The UAE oil company estimates that full flow of Hormuz will not resume until 2027.