Strait of Hormuz Closure Hits 100 Days: Why Oil Prices Haven't Soared
Despite the Strait of Hormuz being effectively shut for over 100 days, oil prices remain low due to strategic reserves and increased production from the US, Brazil, and Canada. Analysts warn that buffers are depleting and prices could change by July.
Oil Market Resilience Under Blockade
The Strait of Hormuz, one of the world's most critical oil chokepoints, has been effectively closed for more than 100 days. According to the International Energy Agency, this is the largest supply disruption in the history of the global oil market. Yet Brent crude stands at around $87.55 per barrel—the lowest since before the conflict began.
Buffers Holding Prices Down
The main reason prices haven't skyrocketed is stockpiles. China holds approximately 1.3 billion barrels in storage and is drawing down about a million barrels per day. The US, Brazil, and Canada have stepped up production, partially filling the gap left by the Hormuz closure. Chinese demand dropped from 12.5 million barrels per day in December to 7 million in May–July.
Dark Trade and Trump's Claims
Precise volumes passing through the strait are hard to track because some vessels disable their AIS transponders and move at night, closer to the Omani border, sometimes with naval escort. President Donald Trump claimed a secret mission moved 100 million barrels, but analysts note that this is only about five days' worth of normal flow. Grades like Murban crude can be exported via Fujairah outside the strait, while Upper Zakum cannot, so its appearance elsewhere signals covert shipments.
When Will the Buffers Run Out?
Experts warn that reserves are nearing depletion. The US, currently acting as a swing producer, faces a deadline at year-end when it must prioritize domestic heating oil. One analyst estimates that by July, if the strait remains closed, the situation could shift. Stocks are approaching operationally critical levels, and additional supply must be replenished.
Return to Normal Operations
Restarting oil production will take time. S&P Global CERA estimates restart timelines of 10 weeks to seven months for fields shut down for two months. IEA Executive Director Fatih Birol says more than 80 energy facilities have been damaged, with recovery possibly taking up to two years. The UAE's national oil company predicts full Hormuz flows won't resume until 2027.
Rapid Reopening Could Crash Prices
A swift, clean resolution to the blockade carries its own risk. If the strait reopens, a flood of stored oil could drive prices down to $50 per barrel. Iraq, starved of revenue for months, might export aggressively. Analysts suggest a new body—like a Middle East OPEC—could be formed to manage supply in the second half of the year.
