The Institute for Energy Economics and Financial Analysis has added its voice to a chorus of analysts who warn that bigger strains on global energy may be just around the corner without an imminent reopening of the Strait of Hormuz, according to a commentary on Monday.
It said the safety net that has averted a much sharper rise in oil prices is derived from some demand destruction, use of oil reserves, efforts to raise production in places independent of the Hormuz Strait plus a steadfast sense that the crisis will not be long-lasting.
But as the crisis drags on, the supply and demand balance, already skewed by the Hormuz Strait closure shutting off 20% of the world's oil and gas supply, is likely to become more lop-sided with impacts for governments, industry and consumers.
IEEFA notes that oil reserves in many countries are running low almost three months into the crisis while the US is about to enter peak "driving season" when driven road miles increase sharply and gasoline demand rises consequently.
Illustrating what some sense as a disconnect between the gravity of the current energy crisis and what they perceive as a subdued market reaction, the report notes that on paper, the current crisis is more serious than the oil crisis of the 1970s, but the sense of urgency is a lesser one.
It also notes that the rise in LNG prices this year is "a blip" compared to the gas market reaction to Russia's invasion of Ukraine in 2022 and gas price movements have been timid in comparison with those of oil, up 72% since January.
IEEFA says that oil prices have not yet touched the $120 level reached in 2022, let alone the record of $147 in 2008, despite forecasts by some analysts that prices will hit $200.
"Oil traders look to be acting in the hope the conflict will be over soon and normal oil shipments will resume," it said.
Part of this may be explained by the fact that prior to the Feb. 28 US strikes on Iran, the oil market was instead grappling with surplus supply, with China having added about 1.1 million barrels a day to its stockpiles over 2025.
With their oil under sanctions, Iran and Russia were hunting for buyers for their crude production, IEEFA said.
Incremental supply increases have provided some buffering, with US sanctions on Russian oil temporarily lifted, but the latter has been contending with repeated Ukrainian strikes on its energy facilities, slowing export flows.
Russia had pounded Ukrainian energy infrastructure including electricity supplies since the outset of its invasion.
Argentina, Brazil and Guyana in the Americas have also raised their production. At the same time, global demand is falling, albeit somewhat artificially as countries in Asia, the region most exposed to the energy crisis, seek to conserve energy to reduce import needs.
China has begun tapping its vast reserves of 1.4 billion barrels, IEEFA said, while reducing imports and with consumption of 17 million barrels a day, those reserves could shrink rapidly.
Globally, stockpiles have fallen to their lowest level in eight years, the commentary notes.
A further tightening of supplies could be evident as early as June, according to JP Morgan Chase, IEEFA said, with low reserves beginning to put "real strain" on economies by September.