Oil Narratives

Risk off mode driving weaker backwardation but geopolitical risk remains

Oil Narratives - Market Overview

Growing chatter of an Iran-US deal has depressed flat prices and time-spreads across crude and products. Backwardation across key futures contracts (Brent, Gasoil, RBOB) have weakened considerably and in some cases (Ice Gasoil) are near pre-war levels.

But global supply remains massively restricted and workarounds (stock releases, supply redirections, sanctions waivers) are only delaying, not reversing market tightness.

In some cases (see distillates section), we see the recent price moves as an entry point for buying, as fundamentals remain little changed:
•The recent resumption of drone attacks in the Middle East Gulf
•A Russian drone attack in Romania (NATO member)
•Straits of Hormuz transits are still extremely low level and Iran’s Persian Gulf Strait Authority (PGSA) is now an OFAC-sanctioned entity.