New York CNN Business  — 

The oil market’s relatively calm response to Thursday’s alarming tanker attacks in the Gulf of Oman is very telling.

Yes, US oil prices jumped — initially climbing as much as 4.5% before retreating a bit — but they didn’t skyrocket. They currently sit near five-month lows despite the fact that the tankers were attacked near the Strait of Hormuz, the most important chokepoint for oil transit on the planet.

The relatively muted reaction shows what’s really driving the oil market right now: signs of deteriorating demand caused by the elevated trade tensions and slowing global economic growth.

In other words, the ongoing trade war is trumping the threat of a potential shooting war — for now, at least.

“The rally is not particularly impressive. In other years, this would be a 5% to 10% move,” said Tom Kloza, global head of energy analysis at the Oil Price Information Services.

Even taking into account Thursday’s jump, US oil prices remain in a tailspin. They’ve collapsed about 20% since hitting $66.30 a barrel in late April. Brent crude, the global benchmark, is down nearly as much.

And that oil plunge has yet to filter through to retail gasoline prices, which move with a lag.

“Unless there’s something really, really dramatic that happens in the Strait of Hormuz,” Kloza said, “the consumer will see lower prices.”

Retail gas prices have already dropped by 17 cents from the 2019 high to $2.72 a gallon, according to AAA. Expect further declines to come.

Security fears ratchet higher

Still, the situation in the Middle East remains serious, for oil prices and the world.

The brazen attack in the Gulf of Oman comes against the backdrop of heightened tensions between the United States and Iran.

“The risk that escalation could get out of hand is not insignificant,” said Jason Bordoff, a former energy adviser in the Obama administration who now leads Columbia University’s Center on Global Energy Policy.

About 22.5 million barrels of oil passed through the Strait of Hormuz each day since the start of 2018, according to energy analytics firm Vortexa. That’s roughly equivalent to 24% of the world’s daily oil production.

The incident comes after four oil tankers were attacked last month off the coast of the United Arab Emirates. Saudi Arabia also reported armed drone attacks last month on a pair of pumping stations in the kingdom.

“This brings up the specter of a tanker war situation,” said Helima Croft, a former CIA analyst who is now RBC Capital’s global head of commodity strategy.

Demand destruction is the focus

But oil prices still haven’t taken off. In fact, crude didn’t even recover the 4% loss it took on Wednesday.

“It’s pretty remarkable,” said Croft. “We’ve now had six tankers struck, the Saudi airport hit and more sanctions coming on Venezuela — and oil still can’t get a bid. It just shows you the strength of the bearish sentiment.”

Normally, Croft said, the combination of all those events would suggest a Brent oil price close to $100, instead of $62.

The negativity is being driven in part by a spike in oil stockpiles in the United States, a likely indication of weak demand caused by the slowing global economy and escalating trade war.

US oil inventories climbed by another 2.2 million barrels last week, leaving them about 8% above the five-year average for this time of the year, according to the US Energy Information Administration.

OPEC on Thursday slightly downgraded its 2019 global oil demand outlook, pointing to “sluggish” demand from developed nations.

Blockbuster US oil growth

Although OPEC had been under pressure to ramp up production earlier this month, the cartel is now widely expected to keep output steady — or even cut it.

The bearish mood in the oil market is noteworthy given recent OPEC supply disruptions. The Trump administration’s sanctions on Venezuela have wiped out the South American nation’s crude shipments to the United States. And Iran’s oil exports have also been sidelined by US sanctions.

But those OPEC barrels have been offset by incredible production in the United States, led by the Permian Basin in West Texas. US output is on track to spike to a record 13.4 million barrels per day by the end of 2019, according to research firm Rystad Energy.

Is the market underestimating the risk in the Middle East?

The oil market could yet be awakened from its slumber if the United States and China reach a trade agreement — or if the security threat in the Middle East worsens dramatically.

A direct US-Iran conflict, or a shutdown of the Strait of Hormuz, remain “long shots” due to Iran’s fear of US military action and the US administration’s aversion to foreign entanglements, Paul Sheldon, chief geopolitical advisor at S&P Global Platts Analytics, wrote in a note emailed to CNN Business on Thursday.

“But the risk of miscalculation in the Middle East is clearly rising,” Sheldon wrote.

In other words, both sides don’t have to want a conflict for one to emerge.

Croft argued that oil prices are not “in any way reflecting the reality of the situation in the region.”

“We may be in a very, very serious security crisis before the market realizes it,” she said.