On June 3, 2026, looking out over the Strait of Hormuz from Oman's Musandam region, numerous vessels are anchored offshore.
A major unresolved puzzle for the global economy is why international oil markets have remained relatively stable despite what is arguably the largest crude oil supply shock in history.
Due to a conflict that has persisted for three months, shipping through the Strait of Hormuz is nearly paralyzed; before the conflict with Iran erupted, few anticipated such an extreme scenario. Data from JPMorgan shows a sharp decline in vessel traffic through the strait, now at just 15% of pre-conflict levels.
However, crude oil futures prices have not surged to the dangerously high levels many analysts previously feared—at least not yet.
A prevailing market interpretation suggests that a significant volume of crude oil is still managing to flow out, breaching the blockade in both directions, thereby cushioning the impact of this historic energy supply shock. Industry experts have revealed that tankers transporting this so-called "secret outflow crude" are turning off their automatic identification system (AIS) transponders to evade tracking and circumvent the blockade controls.
JPMorgan estimates that in the final two weeks of May, approximately 2.1 million barrels per day of crude oil were being secretly shipped out. Before the conflict, the Strait of Hormuz handled an average of 15.6 million barrels per day. While this covert volume represents a small portion, it provides a significant buffer.
Natasha Kaneva, JPMorgan's Global Head of Commodities Strategy, wrote in a client note last week: "Despite the ongoing maritime blockade and a collapse in regular commercial shipping, there is a larger-than-expected volume of crude and refined products moving through the Strait."
Covert 'Ghost Shipping' of Crude Oil
Bob McNally, founder and president of Rapidan Energy Group, stated in an interview that he agrees the secret outflow of crude has, to some extent, delayed and mitigated the energy crisis.
"We initially estimated the flow through the strait would be 0% to 10% of pre-war levels, but with the covert outflow, the actual volume is slightly higher," McNally said. "This flow is far from enough to prevent a major drawdown of inventories and push prices higher; it only slightly eases market tension."
On May 4, 2026, an illustrative image shows a person standing before a large screen viewing vessel movements in the Strait of Hormuz on a ship-tracking website.
Jan Stuart, Global Energy Economist and Strategist at investment bank Piper Sandler, estimates that approximately 2.9 million barrels per day of crude oil flowed out of the Strait of Hormuz in May. About 2.1 million barrels per day of this came from tankers allowed passage after paying transit fees to Iranian-affiliated entities.
The remaining roughly 900,000 barrels per day constitutes "ghost shipping": tankers that turn off their AIS transponders and sneak through the strait's channels under cover of darkness.
"These ghost ships, this secret outflow, are indeed providing a buffer," Stuart stated. "The market is digesting the crisis much better than I had previously expected."
China Significantly Cuts Crude Oil Imports
The international benchmark Brent crude futures fell to $93 per barrel last Friday. While this price is significantly higher than the pre-conflict level of around $70, it has retreated notably from the recent peak of $114.
However, the secret outflow of crude is not the core reason for the market's stability.
Piper Sandler calculates that currently, about 4.5 million barrels per day of crude oil are being exported via other routes from the Persian Gulf. The main artery is Saudi Arabia's East-West Pipeline, which connects Saudi oil fields to the Red Sea port of Yanbu.
More critically, China has substantially reduced its crude oil imports, instead releasing massive volumes from its national strategic petroleum reserves to fill the demand gap.
As a major global energy consumer, this contraction in Chinese demand has effectively alleviated pressure from the crude oil supply shortage.
JPMorgan's Kaneva points out that other buffering factors include a decline in market oil demand that has exceeded general expectations and actual national crude inventory levels that are higher than publicly disclosed data.
"Taken together, these multiple buffering mechanisms can explain why oil prices are hovering around the $100 mark, but this does not mean the impact of the shipping disruption is limited," Kaneva wrote. "On the contrary, it shows the global market has found ways to cushion the shock, albeit at a significant cost."
"The Situation Will Deteriorate Further"
Many seasoned oil industry professionals worry that the market, lulled by various buffering mechanisms, is underestimating the actual impact of the shipping blockade.
Since the conflict began, commercial crude oil inventories have been heavily drawn down. The U.S. Strategic Petroleum Reserve, the national emergency crude stockpile, is depleting rapidly and is on track to reach its lowest level since the early 1980s.
Piper Sandler's Stuart stated: "The situation will only get worse from here."
Stuart predicts that the average price for Brent crude will rise to $130 per barrel in July and August.
If this forecast materializes, U.S. retail gasoline prices could surpass $5 per gallon this summer, compared to the current price of around $4.20 per gallon.
Stuart believes that oil prices need to rise sharply and quickly to force countries to release more emergency reserves and simultaneously curb global oil consumption.
"If you want to guide people to use less oil, high prices are the most direct and effective tool," she said.
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