Markets are supposed to be mechanisms for price discovery. That’s the theory. Markets are also supposed to be efficient. Millions of buyers and sellers, each acting on their own information, come together and arrive at a price. That price is supposed to reflect supply, demand, risk, cost of capital, and expectations for the future.

But in the real world, markets often experience distortions.

Global crude oil prices are a perfect example.

Some of you might remember when in 2020 that oil inventories had swelled to such a high level that futures contracts faced deliveries with no storage capacity to accept the oil. Oil prices went negative briefly.

In recent days, oil futures have fallen on the sentiment that peace talks in the Persian Gulf could reduce the risk of a major supply disruption. That makes sense at one level. If traders had built a war premium into the price of oil, then any credible sign of de-escalation would cause that premium to come out of the market.

But here’s the paradox.

The headlines changed faster than the barrels did.

A peace framework, a ceasefire, or the reopening of a shipping lane does not instantly refill storage tanks. It does not instantly restore shipping confidence. It does not instantly normalize marine insurance. It does not instantly repair disrupted logistics. And it certainly does not instantly rebuild global inventories.

The paper market can move in minutes.

The physical market moves in months.

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