[fraserphysics]

For a long time I've been reading that the closure of Hormuz is going to constrain consumption soon. I understand the economic theory that reducing supply of an inelastic commodity greatly increases the price. The article says that inventories have insulated us from high prices so far. I am surprised by how large and effective those inventories have been. And I am surprised that futures prices are not higher. Can anyone here suggest explanations?

[adammarples]

It is almost entirely explained by China cutting imports significantly. They are running down their inventory waiting for prices to drop again. Consumption was previously constrainted in much of Asia, for example 4 day work weeks etc. The US has also lowered their strategic petroleum reserve to new lows.

[handoflixue]

If, hypothetically, the war ended tomorrow, then we could resume Business As Usual and slowly start rebuilding reserves. The Powers That Be (governments, oil corporations, etc.) have a vested interest in this: while a price spike ostensibly makes money for the oil corporations, it also drives people to invest in green energy, buy electric cars, or make lifestyle changes that reduce long-term consumption. Meanwhile, the politicians benefit from the illusion that everything is under control.

There are still enough reserves to maintain this illusion AND do a fairly orderly "jack up prices, drive down demand" transition if and when it proves necessary.

TL;DR: The whole point of these reserves is to provide this sort of stability