Oil Market Calm Masks a Host of Unknowns
LONDON, June 8 (Reuters) – The biggest oil supply shock in decades has entered its fourth month, with no resolution in sight as neither the U.S. nor Iran appears willing to budge, yet the market remains surprisingly calm. This disconnect reflects an uncomfortable reality: the biggest drivers of today’s energy market are a host of unknowns.
The renewed strikes between Iran and Israel over the weekend have sent oil prices up over 4% to around $98 a barrel on Monday, but Brent crude remains well below levels seen only a few weeks ago and comfortably within the range of the past two decades.
This has happened even though the Strait of Hormuz – the world’s most critical oil chokepoint – has remained largely shut for more than three months, disrupting flows equivalent to roughly 13% of global oil supply.
A large part of the market’s sanguine mood reflects expectations that conditions in the Gulf could change overnight. U.S. President Donald Trump’s repeated assertions in recent weeks that a deal with Iran is imminent have helped cool prices.
Yet there is little evidence that Washington and Tehran are moving closer to a durable agreement, with both sides continuing to strike targets across the region.
Even if a formal reopening of Hormuz occurs in the next few weeks – a scenario that is hardly the base case – this would not instantly translate into a full recovery of flows. Shipping is governed as much by risk assessments as by geopolitics. Tanker operators, insurers and traders are likely to remain cautious about re‑entering the Gulf, fearing vessels could once again become stranded in the event of renewed hostilities.
There are increasing indications that more cargoes have been leaving the Gulf in recent weeks using stealth channels. These are short‑term solutions being employed by desperate operators, not a long‑term strategy for the world’s largest energy companies.
This growing opacity speaks to the larger problem. Oil traders are mostly operating in the dark regarding both supply and demand, raising the risk of a nasty surprise if their assumptions prove faulty.
The market is calm because traders expect Gulf conditions to change quickly and are pricing in the possibility of a U.S.-Iran deal even as flows through Hormuz remain heavily constrained.
The article notes Brent crude around $98 a barrel after fresh strikes, still well below recent peaks and within the trading range seen over the past two decades.
The prolonged closure of the Strait of Hormuz has disrupted shipments equal to roughly 13% of global oil supply, making it one of the biggest supply shocks in decades.
Key unknowns include the timing of any reopening of Hormuz, how quickly tankers and insurers will return, and how much hidden Gulf supply is moving through stealth routes.
Traders are concerned because they are working with limited visibility on both supply and demand, so a shift in Gulf flows or demand expectations could trigger a sharp repricing.
