When the United States and Israel launched military operations against Iran at the end of February, energy analysts warned that oil prices could skyrocket to $150 — or possibly even $200 — per barrel. The concern was that roughly one-fifth of the world’s oil supply, which travels through the critical Strait of Hormuz, could be cut off from global markets.
Those worst-case scenarios never materialized. Brent crude futures topped out at approximately $126 a barrel — staying well under the all-time record of $147 set in 2008. From the start of the conflict on February 28 through June 11, when U.S. President Donald Trump halted strikes against Iran, the average price was just $101 per barrel. By early July, prices had briefly fallen back to pre-war levels near $70.
Here are five reasons oil prices have remained relatively contained — at least for now.
1. China Pulled Back Sharply
The most unexpected development came from China, the planet’s top oil-importing nation. By June, Chinese crude imports had dropped to their lowest point in nearly ten years. The country reduced fuel exports, saw its citizens shift toward electric taxis rather than personal vehicles, and its petrochemical industry also cut back on volumes.
2. American Oil Production Hit a Record
The United States, the world’s leading oil producer, ramped up output significantly, reaching a record 13.93 million barrels per day by April. Washington also tapped into its Strategic Petroleum Reserve as part of a historic 400-million-barrel release that was coordinated through the International Energy Agency in March, helping to soften the blow of supply disruptions.
3. Trump’s Statements Kept Traders Off Balance
President Donald Trump repeatedly caught oil market speculators off guard by making public statements about potential peace deals and the possible reopening of the Strait of Hormuz. This uncertainty made many traders reluctant to place large bets on rising prices, fearing sudden reversals.
“Everybody is bullish now, but nobody is long,” said Ilia Bouchouev of the Oxford Institute for Energy Studies.
After funds reduced their bullish positions in Brent futures to the smallest level of the year in early July, they made their biggest single-week increase in six months during the week ending July 14, according to data from the ICE exchange. Even so, that position — valued at roughly $14.8 billion based on Monday’s prices — remains more than 50% below the six-year peak reached in late March.
Ole Hansen, head of commodity strategy at Saxo Bank, noted that markets are experiencing what he called “headline fatigue,” meaning fresh announcements are having a diminishing effect on prices.
4. Oil Flows Through Hormuz Partially Recovered
Saudi Arabia, the Gulf region’s largest oil exporter, significantly boosted shipments through its Red Sea port at Yanbu, helping to make up for barrels that could no longer move through the Strait of Hormuz. Hormuz shipments briefly resumed in June, easing supply worries, but declined again in July as fighting picked back up.
5. Physical Oil Supply Remains Plentiful
Traders report that there is currently no shortage of physical oil available for immediate delivery, which has limited how much prices have reacted to the latest flare-ups in the conflict. In Europe, crude oil price differentials — such as those for North Sea Forties crude, which help establish the global Brent benchmark — have actually fallen to a discount after hitting a record premium back in April.
“There is a lot of prompt crude around for now,” said veteran trader Adi Imsirovic. “It may not last!”
