Oil Jumps 3.5% as Futures Curve Reflects Ongoing Supply Concerns

Brent crude futures rose $2.67 (3.51%) to $78.68/barrel, while WTI climbed $2.48 (3.47%) to $73.89, after Iran expanded strikes across Gulf states in retaliation for U.S. attacks near the Strait of Hormuz. Both contracts extended weekly gains of roughly 4–6%.

What the futures curve indicates: Unlike a purely headline-driven spike, this move has been accompanied by growing backwardation — near-month contracts trading at a premium to later-dated ones — a structure that is generally associated with tighter physical supply conditions rather than speculative positioning alone. This differs from short-lived geopolitical price moves that often ease as markets digest initial developments.

Supply-side offsets already in motion:

1. The UAE raised crude production to a record high last month as part of broader efforts by Gulf producers to offset potential supply disruptions linked to Hormuz.
2. The IEA has separately warned that a prolonged escalation could delay global inventory rebuilding plans originally expected later this year.
3. Vessel-tracking data continues to show Hormuz traffic running below typical levels, although Washington and Tehran continue to dispute the extent of any formal closure.

Market focus: Analysts at Axi and PVM Oil Associates said Brent prices will continue to be influenced by developments surrounding regional tensions and shipping conditions. They noted that the pace of any de-escalation efforts, alongside evidence of shipping activity returning toward normal levels, will remain important factors influencing market sentiment.

Sources: Reuters, CNBC, IEA