The global oil market has been surprisingly calm despite the war in the Strait of Hormuz, with oil futures not skyrocketing as expected. According to JPMorgan, visible traffic through the Strait of Hormuz remains sparse, estimated at just 15% of pre-war levels.

Clandestine Flows and Decreased Demand

One theory behind the calm market is that a surprisingly large amount of crude is escaping the double blockade of the Strait of Hormuz, helping the global energy system absorb the historic shock. Tankers carrying these so-called “clandestine flows” may be dodging the blockade by turning off transponders to avoid detection, experts told CNN. JPMorgan estimated that clandestine flows amounted to about 2.1 million barrels per day over the final two weeks of May.

Additionally, decreased demand from China, one of the world’s biggest consumers of energy, has helped ease the supply crunch. Piper Sandler estimates that about 4.5 million barrels of crude per day have left the Persian Gulf through other means, mostly via the East-West Pipeline that connects Saudi oilfields to the Red Sea port of Yanbu.

Concerns Over Market Underestimation

Some oil veterans worry that the market, lulled by these workarounds, is underestimating the real-world impact. Commercial oil stockpiles have declined sharply since the war started, and America’s emergency pile of crude, the Strategic Petroleum Reserve, is rapidly heading toward the lowest level since the early 1980s.

Jan Stuart, global energy economist and strategist at investment bank Piper Sandler, estimates that about 2.9 million barrels per day of crude made it out of the Strait of Hormuz in May. This estimate includes about 2.1 million barrels on vessels that appeared to pay tolls to Iranian entities, and about 900,000 barrels of “ghost” transits, vessels that went through the waterway in the dark with transponders off.

Original reporting: KRDO (Colorado Springs metro) — read the source article.