There are many reasons to be increasingly concerned by the U.S.-Iran war’s impact on energy markets, but so far, none of them have translated into the sort of market carnage that was long predicted for such an extreme confrontation.

Benchmark crude oil prices, after actually declining on Wednesday, nosed upward a bit to around $84 a barrel, up from $80 at the start of the week. Many experts expected that a direct and expanding war between the United States and Iran that included the immediate and effective closure of the Strait of Hormuz would send oil to at least $100 a barrel. 

There are many reasons to be increasingly concerned by the U.S.-Iran war’s impact on energy markets, but so far, none of them have translated into the sort of market carnage that was long predicted for such an extreme confrontation.

Benchmark crude oil prices, after actually declining on Wednesday, nosed upward a bit to around $84 a barrel, up from $80 at the start of the week. Many experts expected that a direct and expanding war between the United States and Iran that included the immediate and effective closure of the Strait of Hormuz would send oil to at least $100 a barrel. 

Regardless of how calmly the market reacts, there are a number of physical realities that are becoming more apparent daily, including the all-but-complete end to transit through that vital Hormuz chokepoint; dwindling crude oil storage in the Middle East that will lead to production shutdowns at big oil fields; knock-on effects for refined products, especially in Europe and Asia; and major outages to the production and transport of natural gas, which will also affect Asia and Europe the most.

The first and fundamental problem is that the Strait of Hormuz remains effectively closed to maritime traffic, especially tankers, though a few small vessels, some affiliated with Iran, have snaked through the 20-mile-wide passage. But the oil and natural gas tankers that normally load up in Iraq, Kuwait, Qatar, and Saudi Arabia and carry more than 20 percent of the world’s oil and gas every day aren’t moving.

That closure has had some immediate impacts. Loaded tankers can’t leave the Persian Gulf, which is one reason that Asia (the main destination for Persian Gulf crude) is struggling. China told its big refiners to stop exporting refined products, a sign that incoming supplies of feedstock are not arriving. Jet fuel prices in Asia are soaring to record levels. 

Every day that the waterway remains effectively blocked, whether by Iranian threats, spiking insurance premiums, or actual strikes against commercial shipping, the world uses up another 20 million barrels of oil out of reserve stocks, noted ClearView Energy Partners, an energy consultancy, in a research note. A one-week closure amounts to consuming almost 2 percent of global commercial stocks—small so far, unless, as the Trump administration keeps saying, the war continues for five weeks, eight weeks, or eight months.

The other problem with the Strait of Hormuz’s closure are the empty ships (tankers in ballast) that are stuck outside of it, waiting to get in. They should be deep inside the Persian Gulf, loading oil that is still being pumped from terminals in Iraq, Kuwait, Saudi Arabia, and the United Arab Emirates (and some shadow fleet tankers loading Iranian oil), but they cannot.

Iraq is already running out of storage space for crude that would normally be merrily loaded on tankers and on its way, and it is having to stop production at three major oil fields. That means Iraq is effectively cutting its oil production of around 4 million barrels a day by about 1.5 million barrels a day. (If there is no place to put the crude that comes out of the ground, the only alternative is to stop pumping it. But that carries costs for the long-term viability of oil wells and is not a great solution.)

Iraq is in the worst shape, because it has little spare storage capacity, but all the Gulf producers are in a race against time to varying degrees to get their oil exports moving before they, too, have to cut production. Kuwait could be there in a week; the UAE a week after. Saudi Arabia is the best-positioned, because it can move a lot of its oil from east to west on the aptly named East-West pipeline to export terminals on the Red Sea. However, there is still the threat from long-range Iranian drones and missiles, as well as potential Houthi attacks. (The Saudis are working that workaround harder than ever.)

Earlier this week, the Trump administration announced a two-part plan to solve the Hormuz situation, and that is apparently what helped calm oil and gas markets on Wednesday, though it is not entirely clear why. (Some investment banks are suggesting that the Strait of Hormuz will reopen in a matter of days and be back in business in April.) 

The plan has two parts: The United States will backstop the maritime insurance that has either frozen up, in limited instances, or dramatically spiked in price since the war began; and it will provide U.S. Navy escorts to all maritime vessels transiting the Strait of Hormuz. 

“Effective IMMEDIATELY, I have ordered the United States Development Finance Corporation (DFC) to provide, at a very reasonable price, political risk insurance and guarantees for the Financial Security of ALL Maritime Trade, especially Energy, traveling through the Gulf. This will be available to all Shipping Lines. If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible,” U.S. President Donald Trump posted on Tuesday. 

There are questions about both parts of that plan.

The Development Finance Corporation is a U.S. government agency that provides loans, investments, and political risk insurance to support development projects around the world. However, it is not in the business of providing maritime insurance,  which is a very different and wildly complex business that has evolved over centuries and which has mind-boggling layers of different coverage, insurance, re-insurance, risk pooling, and risk assessment.

Shipowners themselves don’t appear entirely convinced by the Trump plan so far. In a best-case scenario, industry officials said that it couldtake weeks to work up a feasible scheme, but the clock is ticking on Gulf storage facilities and the resilience of the global economy. (That is not to mention the political optics of offering U.S. taxpayer money to underwrite oil cargos that are overwhelmingly destined for Asia, especially for China.)

The other questionable part is the offer of U.S. Navy escorts, since the U.S. Navy told shipping industry officials the day before Trump’s announcement that it would do no such thing. Beyond the simple question of ship numbers—the U.S. Navy is smaller than it has been for decades, and it has no frigates that would be ideal for escort duty—there is the question of sailing back and forth in an active war zone. During operations in the Red Sea, the U.S. Navy found fending off Houthi attacks to be the most intense combat it had faced since World War II, and that was not even an escort mission.

The reason that using escorts would be risky, and why even backstopped insurance might not do the trick, is because Iran retains the ability to inflict serious damage on shipping through the Strait of Hormuz even without most of its navy. Iran has anti-ship missiles, drones, small boats, unmanned surface vehicles, and advanced maritime mines that can (and have already) wreaked havoc on shipping in the region. On Wednesday, a drone struck a container ship in the strait; later that same day, an unmanned boat blew a hole in a tanker anchored off Kuwait. Those physical risks mean that even additional insurance and some escorts would be hard-pressed to convince shipping lines and seafarers to venture into waters that are still deadly.

It’s not just shipping, of course. Iran has targeted Saudi Arabia’s biggest refinery twice, and it hit Bahrain’s main refinery complex on Thursday.

All of that is without counting the knock-on effects of the shutdown of some of the most important natural gas production and export infrastructure in the world, in Qatar, which will take weeks to come back online even after hostilities stop. The sudden tightness in the natural gas market is sending more than shudders through European and Asian power and energy markets; users of natural gas such as aluminum and fertilizer are also increasingly affected.

The war is already intense, and by all U.S. public accounts, will continue for weeks or months to come. The economic impacts, especially regarding energy, have only just begun to be felt. At some point, market insouciance will, like munitions stockpiles, prove unsustainable.