OPEC spare capacity has stabilized markets, but it cannot fully replace lost Persian Gulf exports indefinitely.

Prolonged disruption could eventually exhaust market buffers and trigger a much sharper oil price surge.

I think most energy analysts would have been shocked to learn that roughly three months into a total closure of the Strait of Hormuz, oil would be trading at just over $100 a barrel. I certainly expected prices to be significantly higher by now. The physical math seems indisputable: take that much supply off the market, and prices should respond quickly and decisively.

Oil prices have risen sharply, to be clear. But we are still short of the levels seen following Russia's 2022 invasion of Ukraine, or of the all-time highs set just before the 2008-2009 financial crisis.

Instead of the $150 oil many anticipated, prices have climbed, but not to catastrophic levels. It is easy to look at this and conclude that the market has absorbed the shock. But that interpretation risks confusing resilience with delay. What we are seeing is not a resolution. It is a temporary buffer.

The Market's Hidden Shock Absorbers

The biggest reason the oil market hasn't reacted more violently to the Strait of Hormuz closure is simple: the world entered this crisis with more inventory than many analysts appreciated. Those barrels have acted as a shock absorber. They don't eliminate the problem. They just delay it.

Global commercial stocks have been drawing for weeks. OECD inventories are now below their five-year average, and independent trackers like Vortexa and Kpler show steady declines in floating storage as well. None of this looks dramatic on a chart. The drawdowns are orderly, and prices have risen, but not explosively. On the surface, the system appears to be coping.

But inventory isn't a strategic reserve. It's working stock; the minimum volume needed to keep refineries, pipelines, and blending operations functioning smoothly. Once inventories fall below those operational thresholds, the system loses flexibility. Refiners have fewer crude options. Blending becomes harder. Small disruptions that were previously absorbed start to become more significant.

That's the part that's easy to miss. The drawdown phase looks calm because inventory declines appear one week at a time. The consequences show up later, when the system runs out of slack. The lower inventories go, the longer and harder the recovery becomes, because the barrels that were used to cushion the shock have to be replaced.