Key facts
- Brent crude futures have shifted into backwardation, signaling expectations of tight prompt supply.
Brent Crude Futures Flip to Backwardation Amid Middle East Supply Risks
IN SHORT
Brent crude futures have shifted into backwardation, indicating expectations of tighter prompt supply. This change reflects renewed Middle East hostilities, disruptions in the Strait of Hormuz, and the U.S. reinstating a naval blockade on Iranian oil exports.
Key Numbers
$85.79 per barrelSeptember Brent contract price
$77.49 a barrelBrent contract six months later price
$8 per barrelPremium of September contract over six-month contract
$8.92 a barrelPremium of first-month Brent contract over sixth-month contract
Who's Involved
Reuters
Compiled data on Brent futures curve structure
U.S.
Reinstated naval blockade on Iranian oil exports
Iran
Struck tankers in the Strait of Hormuz
↳ Why This Matters
The shift to backwardation in Brent crude futures suggests that geopolitical tensions in the Middle East are creating immediate supply concerns, potentially leading to higher oil prices in the short term.