Despite tensions with Iran and concerns over supply disruptions, the feared oil market crunch has not materialized. Even with approximately 14mn barrels a day potentially knocked out of a 105mn barrel per day global market, the impact has been cushioned by ample stockpiles and flexible responses from producers and consumers.

Global inventories are being drawn down at over 6mn barrels a day in the second quarter, according to the US Energy Information Administration. Meanwhile, non-Gulf countries temporarily boosted output by 1mn barrels daily by pushing back maintenance schedules. US shale producers can ramp up faster than conventional oil, adding another layer of market flexibility not seen in previous supply shocks.

Demand has also proven more resilient than expected, falling just 3mn barrels per day year-over-year despite Brent crude trading at $92 a barrel. This compares to $200-per-barrel levels during the 2008 financial crisis. The shift toward more price-conscious emerging economies, now accounting for over half the market, and the focus on aviation and petrochemicals—sectors more sensitive to fuel costs—has helped absorb the disruption.

The world appears better equipped to handle oil market shocks than in past crises, but this reprieve depends entirely on inventory levels. Once stored oil is depleted, even these new shock absorbers will reach their limit.