Why hasn't the oil price risen to $100 despite the "actual halt" in navigation through the Strait of Hormuz and attacks on energy facilities in the Middle East?

Actual freight traffic in the Strait of Hormuz has come to a standstill, Qatar's largest liquefied natural gas plant and Saudi Arabia's key refinery have both been attacked—this scenario closely matches the "worst case" described by energy experts, yet oil prices have failed to break through the symbolic $100 per barrel mark.

Over the four days since the conflict erupted, benchmark Brent crude prices have surged about 30%, reaching $85 per barrel on Tuesday, the highest since July 2024. However, this increase still pales in comparison with major historical oil crises, and market panic has been notably subdued.

According to the Financial Times, more than 150 tankers are currently stranded outside the Strait of Hormuz; shipowners and insurers refuse to let vessels cross the conflict zone, effectively shutting down a supply route that accounts for about one-fifth of the world’s oil and gas.

Carlos Bellorin, an analyst at energy data firm Welligence, says "the market reaction is cautious and tends toward wait-and-see," but he also points out that there are no signs of de-escalation, "Iran is escalating, not de-escalating." Analysts generally believe the key variable for oil prices is the duration and severity of the disruption.

Why is the market staying restrained?

This oil price spike far exceeds last year’s 12-day conflict between Israel and Iran, during which energy infrastructure was barely impacted, but compared to several major oil crises in history, the response remains mild.

During the Arab oil embargo of 1973-1974, prices soared 260%; the Iranian revolution in 1979 triggered an increase of about 160%; Iraq’s invasion of Kuwait in 1990 pushed up oil prices by roughly 180%.

The relative calm in today’s market reflects both structural changes and accumulated experience. Developed economies are far less dependent on oil than they were in the 1970s, the US has become the world’s largest oil producer, and new supplies from Guyana, Brazil, and Canada continue to enter the market.

Meanwhile, after Covid and the 2022 Russia-Ukraine conflict, oil and gas traders have accumulated rich experience in rapidly restructuring global energy flows. MST Financial analyst Saul Kavonic points out that the shocks experienced by the industry in the past five years are comparable to the previous 25 combined, making the market more composed—"even somewhat complacent"—about short-term supply disruptions.

Moreover, the market is also assessing the policy intentions of the Trump administration. With November midterm elections approaching, the White House has strong motivation to curb inflation; if oil prices continue to climb, the release of US strategic petroleum reserves could intervene at any time.

Before the outbreak of the conflict, global oil supply was ample and countries had time to build up inventories. According to Vortexa, China's current crude reserves are sufficient to cover 124 days of consumption; global above-ground stocks, although historically low, are still around two billion barrels. Vortexa Chief Economist David Wech says, "Two billion barrels is still quite considerable in absolute terms, while daily supply risk from the Middle East is about 16 million barrels." Saudi Arabia and the UAE can also reroute about nine million barrels a day via pipelines that bypass the Strait of Hormuz.

What scenario will push oil prices over $100?

Analysts' baseline forecast is that if the Strait of Hormuz can return to normal shipping relatively quickly, Brent crude will hold in the $80–$90 per barrel range—this is the judgment of S&P Global Energy oil trading researcher Wang Zhuwei. But if the disruption continues, the situation will worsen significantly.

Kavonic estimates that if the blockade lasts two weeks, more than 250 million barrels of crude oil will be stranded; some Gulf countries will reach tank capacity limits and be forced to shut down field production, sending oil prices above $100 per barrel. This scenario is already beginning: on Tuesday, Iraq shut down part of the world’s largest oil field, Rumaila, citing "critical levels" in its storage tanks.

Carlos Bellorin believes Iran may keep escalating before any potential negotiations to maximize its bargaining chips. "Looking at the current trend and developments, it’s possible oil prices will hit the $90 range by the weekend," he says. The true test for the market may have just begun.

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