Oil Price Dip Masks Looming Supply Issues: What Investors and Businesses Need to Prepare For
Oil prices have eased amid renewed optimism over potential US-Iran negotiations, but significant supply chain disruptions are still looming, warns Nigel Green, CEO of deVere Group, one of the world’s largest independent financial advisory firms.
Brent crude slipped to just below $100 a barrel during early Asian trading, falling by about 1%, while US crude experienced a sharper decline. This price movement comes despite escalating tensions in the Gulf and new restrictions affecting Iranian shipping.
Green explains that while markets are reacting to hopeful headlines about talks, the physical oil market operates with a delay. “What we’re seeing now is a sentiment-driven move, not a true reflection of tightening supply,” he said.
He highlighted the critical role of shipping timelines, noting that oil shipments from the Gulf typically take between two and six weeks to reach major destinations. Deliveries to Europe usually arrive within 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 changes don’t yet reflect the potential disruption underway,” Green added.
The Strait of Hormuz remains a central risk factor, as around 20% of global oil consumption passes through this narrow chokepoint. Even minor disruptions in this region can have exaggerated consequences. Increased insurance premiums, longer detours, and cautious shipping operators all contribute to tighter effective supply.
Green warned that shipment delays of just a few days can quickly compound, leading to fewer on-time cargoes, shrinking inventories, and market adjustments only appearing once these constraints become evident.
The delay between geopolitical events and their economic impact is a key feature of energy markets. Refiners, distributors, and retailers rely on inventories and forward purchasing to shield end users from immediate shocks.
“Households have yet to feel the full brunt,” Green noted. “Fuel and heating costs take time to adjust. A drop in crude prices today does not guarantee relief at the pump if supply tightens in the coming weeks.”
Businesses face a similar lag. Many have hedged energy costs or secured supply ahead, delaying the transfer of higher costs, though not preventing it entirely. Green cautioned that energy-intensive industries, logistics firms, and manufacturers are operating with limited buffers that won’t last indefinitely. As contracts expire, sustained supply constraints will increasingly impact operating costs and profit margins.
For investors, Green advises distinguishing between short-term market fluctuations and underlying fundamentals. Current price movements are driven by shifting diplomatic expectations, while actual supply conditions evolve more slowly.
“Investors should be wary of reading too much into a short-term dip in oil prices,” he said. “The structural risks associated with Gulf supply routes remain significant, and the market has yet to fully price in the potential for disruption.”
Green further noted that energy markets often exhibit a disconnect between sentiment and logistics early in a crisis. This gap tends to close abruptly over time.
Added pressure is coming from operational challenges linked to escalating geopolitical tension. Even without a full blockade, restrictions and uncertainties around Iranian-affiliated shipping complicate global trade flows.
“Shipping decisions are being reassessed in real time. If fewer vessels operate in higher-risk zones or compliance slows activity, supply tightens in practice,” Green explained.
He concluded that while the current modest decline in oil prices reflects optimism about negotiations, the underlying market mechanics suggest a delayed impact. “Time lags in shipping, rising transport costs, and ongoing geopolitical strain mean the real effects are still filtering through the system. Households, businesses, and investors are likely to experience these effects in the coming weeks.”
Special Analysis by Omanet | Navigate Oman’s Market
The recent dip in oil prices amid hopes of US-Iran talks masks the underlying risks of tightening global supply chains, especially through the strategic Strait of Hormuz. For businesses in Oman, particularly those in energy-intensive sectors, rising operational costs and margin pressures are imminent as shipping delays and increased insurance costs compound. Smart investors and entrepreneurs should prepare for a delayed but significant supply shock, focusing on long-term fundamentals rather than transient market sentiment, while exploring opportunities in logistics and energy alternatives to mitigate risk.
