Forbes: The Oil Market Canceled The Hormuz Crisis Before The Ceasefire

Date: June 18, 2026
Author: George Calhoun, Forbes
URL: https://www.forbes.com/sites/georgecalhoun/2026/06/18/the-oil-market-canceled-the-hormuz-crisis--even-before-the-ceasefire/

Key Thesis

The energy crisis was "effectively neutralized through the natural functioning of the market" before diplomacy succeeded. The market adjusted so quickly that the anticipated shortage flipped into a "mini-glut."

Supply Adaptations (How Producers Responded)

Pipeline Bypasses

  • Saudi East-West Pipeline: Boosted from ~5M b/d to ~7M b/d by April — +2M b/d
  • UAE Habshan-Fujairah pipeline: Increased from 2.1M b/d (March) to 2.6M b/d (May) — +500K b/d

Non-Gulf Producers Stepped In

  • Venezuela: +170-200K b/d
  • Norway: +200K b/d
  • Brazil: +100-200K b/d
  • Canada: +400K b/d
  • US: +3.8M b/d in April (Vortexa data); net petroleum exports at ~9M b/d — highest ever

Total estimated production increase: ~7M b/d — reducing the Hormuz deficit by 30-60%

Demand Destruction (How Consumers Responded)

The Economist's Numbers

  • Big oil-buying regions imported 11M b/d less petroleum than a year earlier
  • China's purchases dropped by 6.6M b/d
  • Kpler: Chinese seaborne crude imports fell 3.6M b/d from February to April

Country-Level Demand Reductions

  • Japan: −1.9M b/d
  • Korea: −1.0M b/d
  • India: −760K b/d
  • EU gasoline demand: −3.5% in April (Germany, Norway, Austria: double-digit declines)
  • UK gasoline sales: −10.2% in April
  • China local fuel sales: −22% in April
  • Airline traffic: −3.4% in April (passenger revenue); available seats −2.9%
  • Airline fuel consumption: −2.6% to −6% (March to April)

Behavioral Adjustments

  • Work week reductions, AC restrictions, work-from-home rules, flight cancellations

Price Dynamics

  • WTI at ~$85 by June 11 (vs. $68 on Feb. 27) — despite the mini-glut
  • Oil tumbled nearly 20% in May — biggest monthly swoon since COVID onset
  • Price fell nearly 30% prior to the ceasefire — with the strait still closed
  • Calhoun's explanation: risk premium shrank while baseline fundamentals improved — both pushing prices down

The Mini-Glut vs. High Prices Paradox

  • If there is a glut, why were prices still elevated?
  • Calhoun's framework: In a crisis, price conflates (a) baseline physical fundamentals with (b) a risk premium for future disruption possibility
  • Both components were adjusting downward as ceasefire prospects improved

Additional Supply Relief Already in Motion

  • OPEC+ announced production increase of ~200K b/d
  • OPEC spare capacity: 5-6M b/d estimated
  • EPA eased ethanol fuel restrictions; ethanol production +3.5% (March-May YoY)
  • 47% of US drillers plan production increases (Dallas Fed survey, May 2026)
  • Pre-Hormuz IEA forecast was already projecting a 4M b/d global surplus by end of 2025

Analytical Notes

  • This is the most comprehensive post-hoc analysis of why the crisis was less severe than feared
  • The mini-glut finding has major implications: when Hormuz fully reopens, the supply surge could be substantial
  • Calhoun's risk-premium framework explains the physical-paper disconnect identified in the synthesis
  • The 7M b/d supply offset is a key data point for understanding how quickly the market can adapt
  • Forward implication: Brent averaging $92 in 2026 (Wood Mackenzie) / $78 in 2027 may prove optimistic if the mini-glut deepens