Asia and the world is facing an oil crisis. Why aren't markets worried?

Key Points:

• Brent crude and West Texas Intermediate crude prices have declined from their April peaks but remain around $100 a barrel, still significantly above pre-Iran war levels, with the market currently suppressed by investor optimism about a quick resolution.
• The closure of the Strait of Hormuz has created a massive oil deficit exceeding 1 billion barrels, posing significant risks to Asia, which heavily depends on Middle Eastern fuel and could face economic recession and rising food and fuel prices.
• Despite substantial global oil inventories acting as a buffer, only a fraction is readily accessible, and prolonged supply disruptions could push prices beyond $150 a barrel, with the current market being "backwardated" due to expectations of conflict resolution.
• Demand destruction is occurring as countries in developing Asia implement energy-saving measures, leading to negative oil demand growth this year, while increased supply from non-OPEC countries may meet demand by 2026.
• The ongoing conflict threatens second-order effects such as recession, currency weakening or collapse in Southeast Asian economies, and potential food shortages due to higher agricultural input costs and reduced planting.