Why oil prices haven't shot through the roof yet

Oil prices have not surged as much as many traders expected after a major shock to Middle East shipping. Brent crude has stayed below $100 a barrel and recently fell to the mid-$80s, even as the Strait of Hormuz remained the focus of market anxiety.

The latest move lower came as markets reacted to signs that traffic through the strait may be recovering and to renewed hopes for a U.S.-Iran deal. The Financial Times reported Brent crude touched a three-month low near $85.80 on June 12, while MarketWatch reported Brent at $87.33 and West Texas Intermediate at $84.88 later that day.

Why the rally has been muted

The biggest brake on prices has been demand, not just supply. The Wall Street Journal reported that China is importing about 3 million barrels a day less oil than before, with May imports around 7.8 million barrels a day. That weaker import profile has removed a major source of support for global prices just as the market has been absorbing new geopolitical risk.

That matters because China is a central buyer in global seaborne oil trade. If its imports remain subdued, a supply disruption that might otherwise push benchmarks sharply higher can be partly offset by weaker consumption elsewhere.

Traders are also being cautious. The market has been shaped by uneven official statements, uncertainty about how much oil is really moving through the strait and a broader reluctance to take aggressive long positions while the geopolitics remain fluid.

What is still flowing

The shock has not been a total stop to supply. U.S. Energy Secretary Chris Wright said shipments through the Strait of Hormuz have risen to about 7 million barrels per day, according to the Houston Chronicle, though Houston executives quoted in the same report said that estimate may be too high and argued the level could be closer to 3 million barrels per day.

That gap matters. If flows are recovering, even partially, the market can treat the disruption as serious but manageable. If flows were to stall again, the pricing reaction could be much faster.

The Journal also reported that traders are reluctant to believe a stable new normal has been reached. With official messaging still contested and vessel-routing data incomplete, the market is still pricing uncertainty rather than a clear shortage.

The buffers behind the market

Inventory data are also helping absorb some of the shock. The U.S. Energy Information Administration reported that commercial crude stocks fell by 7.2 million barrels to 426.5 million in the week ended June 5. The agency also said Strategic Petroleum Reserve stocks fell by 7.9 million barrels to 349.2 million, reflecting emergency releases tied to Middle East supply disruptions.

Those draws do not eliminate risk. They do, however, show that the market still has some cushion before consumers and refiners face the kind of immediate, visible shortage that tends to force a sharper price spike.

Reserve releases and existing stockpiles can slow the adjustment. They do not solve the underlying vulnerability, but they can delay the moment when traders decide the market has run out of slack.

What could change next

The balance can shift quickly. If Strait of Hormuz traffic falters again, if inventories keep falling, or if Chinese imports recover, oil could reprice sharply in either direction. The market is still trading on a mix of official claims, partial shipping recovery and expectations about whether the geopolitical shock worsens or eases.

For now, the combination of softer Chinese demand, partial flow recovery, reserve releases and cautious trading has kept the rally contained. But the same factors that are holding prices down could stop doing so if the next headlines point to a renewed disruption.

That is why traders are watching vessel traffic through the strait, the next EIA inventory report and import data from China. If those signals turn tighter at the same time, the market could move back toward the kind of spike that many feared at the start of the disruption.