Energy markets are adapting to the Iran war as a ‘forever conflict’ while oil producers keep supplies flowing and avoid ‘mutually assured destruction’

Despite Iran stepping up attacks on tankers in the Strait of Hormuz, the flow of oil from the region is actually above prewar levels as Persian Gulf states hold off on crossing certain red lines—for now.

According to tracking firm Kpler, shipments via the strait and alternate routes averaged more than 24 million barrels a day last week, topping the average of 23.3 million before the U.S. and Israel launched the war in late February.

To be sure, Hormuz traffic hasn’t returned to normal as the threat of Iranian attacks continues to scare off some tankers. But because of the lucrative payouts that transiting the strait can provide, enough ships are taking on the risk.

At the same time, pipelines that bypass the strait are picking up the slack, and top oil consumers have also reduced demand. In fact, prices for some Middle East oil supplies in Asia are now selling for less than they were a month ago, sources told Bloomberg.

So while the war has dragged on for eight months with no end in sight, oil markets have yet to go off a cliff. Brent crude prices have surged in recent days on reports that the U.S. and Israel are preparing to attack Iran again, but they remain below peak levels seen at the height of the war as the new normal sets........

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