The article discusses the current oil market dynamics amidst a conflict in Iran that has significantly impacted global oil supply. Despite the anticipated crisis, oil prices have remained stable due to ample oil stocks and a more flexible market structure. Key highlights include that while April saw a loss of 14 million barrels per day from global supply, pre-existing surpluses and increased production from non-Gulf countries have cushioned the impact. Robust demand has decreased slightly, with 3 million barrels less consumed daily compared to the previous year, influenced by changes in consumer behavior, particularly in emerging economies. Overall, the current circumstances suggest a temporary reprieve for the oil market, dependent on the longevity of existing inventories.

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Why the much-feared crunch in oil markets has yet to arrive

Still-ample stocks and some more reactive producers and consumers look to have left the world better equipped to cope with disruption

Several large vessels are anchored in calm waters of the Strait of Hormuz under a hazy sky, with birds flying low across the foreground. Net of the trickle of ships chancing the Strait of Hormuz and the flows which have been rerouted via pipelines, the conflict erased some 14mn barrels a day from global supply of crude and products in April© Reuters

PublishedJune 11 2026

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Ask industry old-timers, and they will say the oil market is not very flexible. Diesel and gasoline have to become very expensive before people slam on the brakes. And on the supply side, it takes a long time for higher oil prices to nudge production up. So it might seem strange that the conflict in Iran has yet to produce a major fuel crisis.

In theory, even a small wobble should send prices skyrocketing — to say nothing of a conflict that has closed the seaway through which a fifth of oil flows. In reality, the blow has been cushioned somewhat by surpluses built up before the war started.

Net of the trickle of ships chancing the Strait of Hormuz and the flows which have been rerouted via pipelines, the conflict erased some 14mn barrels a day from global supply of crude and products in April, the International Energy Agency suggests, from what used to be a 105mn barrel per day market. But before that, supply outpaced demand by 3.5mn, according to Wood Mackenzie, which would make the real shortfall a more manageable 10 -11 mn barrels or so.

Ample production also meant that the world entered this crisis with a lot of stored oil. Those stockpiles are now being drawn down with abandon. Global inventories will be tapped for over 6mn barrels a day in the second quarter, thinks the US Energy Information Administration.

More surprising, though, are the unforeseen pockets of flexibility that have shown up in this crisis. In the face of the disruption, non-Gulf countries have managed to increase their oil production by some 1mn barrels a day, according to Rystad Energy. Some of this will be temporary — the result of pushing back planned maintenance at production plants. And in some ways the market is indeed more flexible than in prior oil shocks: US shale producers, for example, can come online faster than conventional oil.

Demand, usually seen as pretty inflexible, seems also to have shrunk a little. The world used 3mn barrels less per day in April than it did a year earlier, in large part because Asian petrochemical plants stalled. That’s despite Brent crude oil costing $92 a barrel, far less than the $200 in today’s money that it took to create balance in the market during the financial crisis of 2008.

Line chart of Consumption of petroleum products (mn barrels per day) showing Emerging flexibilities

That has something to do with the changing nature of oil consumers: more price-conscious emerging economies now account for over half the market. And recent demand growth has been driven by aviation and petrochemicals. Both are more sensitive to fuel costs than trucking: aviation is a little more discretionary, particularly when it comes to tourism, than many forms of freight. And petrochemicals customers may find more of what they need from US plants that run on cheap natural gas feedstock.

In sum, still-ample stocks and some more reactive producers and consumers look to have left the world better equipped to cope with an oil market disruption than it was. But, of course, that stands as long as inventories last. At some points, even these new shock absorbers will wear out. This is a temporary reprieve, however welcome.

camilla.palladino@ft.com

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