Brent Crude Oil Premium Spikes on Middle East Supply Risks
The price of Brent crude oil futures for prompt delivery has surged to a one-month high over the price for oil six months later due to renewed risks to Middle Eastern supplies and shipping through the Strait of Hormuz.
The first-month Brent contract traded $8.92 a barrel above the sixth-month contract, its largest premium since June 10. This market structure is known as backwardation and indicates tight near-term supplies.
The move follows a sharp escalation in tensions between the U.S. and Iran, including renewed military strikes and attacks on vessels near the strait, which have reignited concerns over the security of Middle East oil supplies.
Ole Hansen, Saxo Bank's head of commodity strategy, said: 'The return to backwardation signals that the market expects crude availability to remain constrained in the weeks ahead.'