Oil price dip masks looming supply issues
Oil prices have slipped on renewed hopes of US-Iran talks, but the real strain is still building due to delays in global supply chains, warns the CEO of one of the world’s largest independent financial advisory organisations.
The warning from deVere Group’s Nigel Green comes as Brent crude trades just below $100 a barrel in early Asian activity, easing around 1%, while US crude falls more sharply, even as tensions in the Gulf intensify and new restrictions linked to Iranian shipping begin to take effect.
“Markets are reacting to headlines about possible negotiations, but the physical oil market operates with a delay,” he says.
“What we’re seeing now is a sentiment-driven move, not a true reflection of tightening supply.”
He continues: “Shipping timelines are critical. Oil cargoes from the Gulf typically take between two and six weeks to reach key destinations, depending on the route.
“Europe can see deliveries in roughly two to three weeks, while shipments to Asia often take longer.
“Tankers currently at sea were loaded before the latest escalation, so today’s price movements are not yet capturing the disruption that could be forming.”
The Strait of Hormuz remains at the centre of the risk. Around 20% of global oil consumption flows through this narrow passage, making it one of the most important energy chokepoints in the world. Even limited interference can have outsized consequences.
Higher insurance costs, longer routing times, and hesitation from shipping operators can all reduce effective supply. Even if barrels start moving, they will be moving with greater friction.
The deVere CEO continues: “A delay of several days per shipment quickly compounds across the system. Fewer cargoes arrive on time, inventories begin to tighten, and the market adjusts only after those constraints become visible.”
The lag between geopolitical events and real economic impact is a defining feature of energy markets. Refiners, distributors, and retailers rely on inventories and forward purchasing, which insulates end users temporarily from immediate shocks.
“Households have not yet felt the full impact,” notes Nigel Green. “Fuel and heating costs adjust with a delay. A dip in crude prices today does not guarantee relief at the pump if supply tightens in the weeks ahead.”
Businesses face a similar dynamic. Many companies hedge energy exposure or secure supply in advance, which delays the transmission of higher costs but does not eliminate it.
“Energy-intensive sectors, logistics firms, and manufacturers are operating with a buffer that will not last indefinitely,” says Nigel Green.
“As contracts roll over, any sustained tightening in supply will begin to feed through into operating costs and margins.”
For investors, the current environment requires a distinction between short-term market moves and underlying fundamentals. Price action is being influenced by shifting expectations around diplomacy, while physical supply conditions are evolving more slowly.
“Investors should be cautious about reading too much into a short-term decline in oil prices,” he warns.
“The structural risks tied to Gulf supply routes remain significant, and the market has yet to fully price the potential for disruption.”
He adds: “Energy markets often show a disconnect between sentiment and logistics in the early stages of a shock. The gap tends to close over time, and it can do so abruptly.”
Additional pressure is emerging from operational constraints tied to heightened geopolitical tension. Even without a full blockade, restrictions and uncertainty around Iranian-linked shipping are creating complexity across global trade flows.
“Shipping decisions are being reassessed in real time,” says Nigel Green. “If fewer vessels are willing to operate in higher-risk zones, or if compliance requirements slow activity, supply becomes tighter in practical terms.”
He concludes: “The current slight drop in oil prices is being driven by optimism around negotiations, but the mechanics of the market point to a delayed impact.
“Time lags in shipping, rising transport costs, and ongoing geopolitical strain mean the real effects are still working their way through the system.
“Households, businesses, and investors are likely to feel those effects hit in the next few weeks.”