The Strait of Hormuz Has Been Closed for 100 Days. Why Aren’t Oil Prices Higher?
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- The Strait of Hormuz has been effectively shut for more than 100 days, with WTO data showing a 95% reduction in crude oil shipments from Arabian Gulf ports and a 99% drop in LNG carriers, yet Brent crude sits at $87.55 per barrel — the lowest since before the conflict began.
- China is holding up the market with approximately 1.3 billion barrels in storage, drawing it down at around a million barrels a day, while its oil demand fell from 12.5 million barrels a day in December to roughly 7 million in May through July, per Kpler's Matt Stanley.
- The IEA has labeled the disruption "the largest supply disruption in the history of the global oil market," and executive director Fatih Birol said more than 80 energy facilities have been damaged, with recovery potentially taking as long as two years.
- President Donald Trump claimed a secret US mission moved 100 million barrels through the blockaded strait — roughly five days' worth of pre-conflict traffic achieved over more than a month, which Kpler's Stanley called "a relative drop in the ocean, literally."
- The UAE's national oil company estimates full Hormuz flows won't resume until 2027, while S&P Global CERA puts restart timelines at 10 weeks to seven months and Stanley estimates three months just to get basic operations running again.
- Global oil supply fell 10.1 million barrels per day in March, with OPEC+ production dropping 9.4 million barrels per day month-on-month, and stocks are now approaching what analysts call "operationally critical levels" with the US facing an end-of-year deadline to prioritize domestic production for home heating.
- A sudden reopening could crash prices to $50 as pent-up supply from revenue-starved countries like Iraq floods the market, potentially forcing OPEC to manage the release or form "something like an actual Middle East OPEC," Stanley said.
Why it matters: China's 1.3-billion-barrel stockpile drawdown is buying the world months of price calm, but analysts say those buffers are approaching 'operationally critical levels' by October and the US faces its own end-of-year deadline for domestic heating — meaning the current $87 Brent price is a countdown, not a resolution, and an unexpected reopening could trigger a crash toward $50.
