Oil market absorbs biggest supply shock without price surge

WASHINGTON, 14 AUGUST 2026 —

The oil market has absorbed what analysts call the largest supply shock in history without crude prices rising above US$90 a barrel, defying expectations that the Iran war would trigger a supply squeeze.

The muted price response reflects a combination of strategic stock releases, pipeline bypasses and a sharp drop in Chinese import demand that has freed up barrels for other buyers. Commercial stockpiles have also acted as a buffer, preventing the shortages that typically push prices higher during geopolitical crises.

“In price, is knowledge,” said Javier Blas, writing for Bloomberg Opinion. “So what is the oil price telling us? At less than US$90 a barrel, it isn’t screaming shortage.”

The resilience of prices comes despite the conflict. According to US Energy Secretary Chris Wright, nearly 9 million barrels a day crossed the Strait of Hormuz during the prior week, a figure that places total Gulf exports close to pre-war levels.

His claim clashes with private tanker trackers, most of which estimate recent Hormuz flows at 4 million to 5 million barrels a day. Wright, facing a backlash, doubled down the next day, arguing that firms undercounted vessels because some move covertly through the waterway.

“Many private businesses undercount the number of ships leaving the Strait of Hormuz due to ships moving covertly through the waterway,” he said on August 12.

Assessing the true volume of crude leaving the Persian Gulf is critical for gauging the oil market’s direction and, by extension, the outlook for inflation and interest rates. The White House has sought to talk down prices since the war began, a campaign that has largely succeeded despite skepticism from long-only investors.

Wright’s credibility has been undermined by a series of missteps, including playing down price risks before the conflict and an official staffer sending an incorrect social media post from his account. Still, the market’s dismissive reaction to his Hormuz estimate may be premature, given the severe limits on public data.

Before the war, tracking tankers was straightforward. Vessels broadcast their position via Automatic Identification Systems (AIS), and when ships “went dark” by switching off their transponders, high-resolution satellite imagery filled the gaps. Today, the task is far harder.

Nearly all vessels in the Gulf have stopped transmitting AIS signals, most high-resolution satellite vendors have ceased selling imagery under US pressure, and cargo flows now involve ship-to-ship transfers at sea that obscure origin and destination.

The market now relies on just two EU-operated satellites that provide a single snapshot of the Strait every three to five days—too infrequent to capture fast-moving tanker movements. Traders can time loadings to avoid detection between overpasses.

Independent analysts place Hormuz flows at 3 million to 5 million barrels a day, while Wright’s figure of 9 million barrels a day implies far greater volumes are escaping notice. The discrepancy raises a simple question: can the market be missing so much crude?

The possibility cannot be ruled out. Wright has access to intelligence the public lacks, including military data from the US and Gulf allies such as the United Arab Emirates, Kuwait, Qatar and Iraq, all of which are involved in covert tanker operations.

Analysts admit they may have underestimated flows in May and June when dark transits began. Using identified tankers and adjusting for known unknowns, one analyst estimates at least 5 million barrels a day are transiting Hormuz. Adding one unobserved supertanker a day pushes the total to 7 million barrels, while two would lift it to 9 million—close to Wright’s figure.

The sustainability of such flows is another question. Wright’s estimate is a seven-day average, but dark crossings typically occur in convoys that exit the strait in bursts. A weekly average could overstate volumes if it captures two large convoys within the same period.

Conspiracy theories have filled the information void. Some claim Hormuz is closed but that the US Treasury is secretly intervening to suppress prices. In the Middle East, whispers describe night-time crossings, convoys under fire despite US protection, and daring ship-to-ship transfers far from prying eyes.

Yet one visible signal points to ongoing traffic: oil spills in the Strait of Hormuz, visible on satellite imagery, are increasing by the day. The pattern suggests Iran is trying to keep the waterway closed while others work equally hard to keep it open—perhaps more successfully than observers realise.

For Malaysian business readers, the episode underscores how opaque oil flows have become, complicating price forecasts that shape everything from transport costs to petrochemical margins.

Related: Washington