Oil prices have eased in early Tuesday trading on renewed hopes of US-Iran dialogue, but a leading financial analyst warns the retreat is deceptive and that the real supply shock is still working its way through the system.
Brent crude fell around 1.87 percent to $97.50 a barrel in early Asian trade on Tuesday, while US West Texas Intermediate (WTI) dropped 2.27 percent to $96.83, as signs of potential diplomatic contact between Washington and Tehran reduced immediate supply alarm. President Donald Trump stated that Iran had initiated contact with Washington, while Iranian President Masoud Pezeshkian signalled readiness to pursue continued dialogue.
But Nigel Green, chief executive of global financial advisory firm deVere Group, cautioned against reading the price dip as a signal that the crisis is easing. “Markets are reacting to headlines about possible negotiations, but the physical oil market operates with a delay,” he said. “What we are seeing now is a sentiment-driven move, not a true reflection of tightening supply.”
Green pointed to the time lag between geopolitical events and their impact on physical delivery. Oil cargoes from the Gulf typically take between two and six weeks to reach key destinations, meaning tankers currently at sea were loaded before the latest escalation took hold. “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,” he said.
ANZ analysts estimated that around 10 million barrels per day of crude supply have been effectively removed from the market, and that a prolonged US blockade could curb an additional three to four million barrels per day. War risk insurance premiums have risen to ten times pre-war levels, and the Containerized Freight Index has jumped more than 10 percent over the last month and is up more than 35 percent from a year ago.
Green warned that households and businesses have not yet felt the full impact. “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,” he said. Energy-intensive industries, logistics companies, and manufacturers are operating on hedged contracts and forward purchases that provide a temporary buffer but will not absorb a sustained disruption indefinitely.
The International Monetary Fund (IMF), the World Bank, and the International Energy Agency (IEA) have urged countries to avoid hoarding energy supplies or imposing export curbs, describing the situation as the most significant shock ever to the global energy system.
Green concluded: “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.”
