Oil is the dog that has not barked since the Middle East blew up. If Iran had launched a full-blown missile strike at Israel at any earlier time in the last half century, the price of crude would be spiralling into the danger zone.

This strange calm may be because the world has yet to grasp the enormity of what is happening. Markets traded contentedly all through July 1914 after the Sarajevo assassination, sceptical because Europe’s great powers had gone to the brink so many times before and each occasion proved a false alarm. It was only after Austria’s ultimatum to Serbia that they began to discern an unstoppable chain-reaction.

A gas flame at the Salman Oil Field operated by the National Iranian Offshore Oil Co. Traders are anxious that Israel may strike Iranian oil assets.Credit: Bloomberg

Nevertheless, it is remarkable that crude is still trading close to a three-year low days after Israel decapitated the leadership of Hezbollah, prompting Iran’s Revolutionary Guards to sweep aside the more dovish Pezeshkian government and set off what is a regional conflagration.

Brent futures have only nudged up and cannot seem to break through $US78 ($114) a barrel. Saudi Arabia has even warned over recent days that prices could drop to $US50. This compares with $US120 in mid-2022 after Russia’s invasion of Ukraine or $US148 in mid-2008 at the peak of the China boom – roughly $US216 in today’s money.

The immediate and banal explanation for this insouciance is that Canada, Guyana, Brazil, and America’s shale frackers are adding supply faster than a becalmed world economy can absorb it. Global manufacturing is in a deep recession. Combustion vehicles make up less than half of new car sales in China.

The OPEC-Russia cartel has been withholding 3 million barrels a day in a failed attempt to........

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