The risk of geopolitical disruption to oil supply at a time of already tight inventories due to the strong post-pandemic recovery has sent the premium commanded by barrels for prompt delivery soaring, suggesting the current price rally has further to run.
Under this “backwardated” market structure, the current price is higher than that of later-dated contract months, encouraging traders to release oil from storage and sell it promptly.
The six-month spread between Brent for March delivery versus September delivery was $6.75 on Friday, the steepest since 2013.