The world has just been struck by one of the worst energy crises since the Russian invasion of Ukraine four years ago. The outbreak of war in the Middle East is almost certainly going to be far more significant. Yet the price of oil only ticked up $10 in the first few days and as the first week comes to a close Brent is trading at $85 a barrel, about $20 higher than the prewar level in January. JP Morgan’s prediction that oil prices could go to $150 still seems far away.

Gas prices are being much more dramatically affected. On the Title Transfer Facility (TTF) Virtual Trading Point in the Netherlands natural gas prices rose from €35MTh prewar to €55 as of at the time of writing.

However, the problems there are far more obvious. The state-owned QatarEnergy has declared a force majeure, effectively defaulting all its obligations to customers. The close of the Straits of Hormuz have bottled up around fifth of the world's supplies of both gas and oil. Yet the market appears to be still taking this disaster in its stride.

The reason is traders and politicians take some time to digest catastrophic events. Looking at price performance in previous crises, typically it takes about two months before the worst of the price swings appear.

The same thing happened in the 1998 Russian financial crash when the government defaulted on $40bn worth of bonds overnight, causing a major economic crisis. The newly founded RTS stock market index had made a five-fold increase in its three short years of life to reach just over 500 when the meltdown hit. On August 17th of that year the house came down and the ruble lost three quarter of its value in a day and the entire top tier of the banking sector was wiped out in one fell blow. Yet it took another two and half months for the index to reach its nadir of 38 in the middle of October – and another five years to regain its pre-crash level.

Oil markets are almost certainly still under-pricing the potential impact of the latest geopolitical tensions, say commentators. The historical patterns suggest that crude prices often rise gradually for weeks after a major disruption, rather than immediately.

Prices initially tend to react cautiously to geopolitical shocks before moving higher as physical supply disruptions begin to affect inventories and shipping flows, market participants say.

“History shows a clear pattern,” said Jack Prandelli, a commodity trader and commentator on global commodities markets. “Oil shocks don’t peak on day one.”

As bne IntelliNews reported, a gas crisis is already unfolding simply as QatarEnergy is singularly so important to the global LNG market, which remains an immature business served by few players. However, the oil markets are a vast array of players and producers and will take a lot longer to react. Moreover, as bne IntelliNews reported, those supply bottlenecks have yet to make themselves felt, although production stoppages are now starting to appear and will only get worse.

Brent crude and other benchmarks often rise progressively following geopolitical crises as traders reassess supply risks and physical market constraints begin to emerge. According to Prandelli, past disruptions ranging from wars to political upheaval have typically produced a delayed but sustained market response.

“After major geopolitical shocks, oil prices usually rise gradually for weeks,” he said.

He pointed to several historical examples where markets initially reacted cautiously before prices accelerated, including the Russia–Ukraine invasion, the Arab Spring uprisings across the Middle East and North Africa, conflicts in the Gulf and supply disruptions in Venezuela.

In many cases, traders initially focus on financial market sentiment while the real impact emerges later in physical flows such as shipping delays, refinery disruptions or declining inventories.

“The average pattern shows oil typically climbing 20–30% within 60 days after the shock,” Prandelli said.

That delayed reaction reflects the time it takes for geopolitical disruptions to translate into measurable changes in supply and demand balances.

“In other words,” he added, “markets often underprice the first phase of supply risk. The real move tends to happen once physical disruptions start showing up in flows and inventories.”

At this stage the consensus is still that the Iran war will be over in a month and will not cause a price spike, according to a note released by Fitch on March 4. However, bne IntelliNews’ own military analyst Patrica Marins holds a much more pessimistic view.

“How long will the war last? A very long time. The Russians have already expended about 200,000 tons of missiles, bombs, and drones in Ukraine over four years without ending the war,” says Marins.

The US-Israel coalition is dropping an average of 1,000 tons per day on Iran, and ramping that up won't win the war, based on the Russian experience in Ukraine, plus lessons from Afghanistan and Vietnam.