The $150 that never arrived
When the Strait of Hormuz effectively closed on February 28, the consensus was clear: oil would spike to $150 a barrel, maybe higher. Ten weeks later, Brent trades at $107.52 and WTI at $101.69. Both are up more than 40% from pre-war levels, which is painful. But it is not the catastrophe the models predicted.
Twenty percent of the world's seaborne oil transits the Strait. Losing that volume for this long should have broken the market. Three things stopped it.
China opened the taps on its reserves
The biggest cushion has come from Beijing. China built one of the world's largest strategic petroleum reserves over the past decade, stockpiling cheap crude during every dip. Now it is drawing those reserves down at a steady pace to feed domestic refineries.
Morgan Stanley analysts said China could sustain its current draw rate "for months, possibly the balance of the year." That single factor has absorbed a significant share of the missing Gulf barrels. Without it, the picture would be very different.
Prices were low coming in
Brent sat near $74 when the war started. Global inventories were not stretched. Demand had been soft through late 2025 on weak Chinese industrial output and a slowdown in European freight. The crisis hit a market with some slack in it, not one already running hot.
That is a sharp contrast with 2022, when Russia invaded Ukraine while oil was already above $90 and OPEC spare capacity was thin. The starting point matters.
The market keeps betting on a deal
Futures curves have consistently priced in a Hormuz reopening within months. Every diplomatic signal, however faint, triggers a wave of short selling. Last week alone, deal rumors sent Brent crashing $17 in four days before the rally resumed.
Goldman Sachs chief economist Jan Hatzius put it this way: "Markets never lost faith that very large consumer price hikes would prompt a US policy shift."
That faith has been wrong so far. Trump rejected Iran's latest proposal on May 10. Saudi Aramco CEO Amin Nasser told investors on Sunday that the market will not normalize until 2027 if the Strait stays closed past mid-June.
The risk is still to the upside
The three pillars holding prices down are all temporary. China's reserves deplete. Pre-crisis slack gets consumed. And at some point, the market may stop pricing in a deal that keeps not happening.
Brent at $107 is not the crisis everyone expected. It may just be the crisis arriving on a delay.