Brent crude flipped into contango on Wednesday, with second month contracts trading higher than prompt delivery for the first time since the Iran war began in late February. Contracts for September delivery settled about 12 cents above August, a structure that signals ample near term supply and softer expectations further out. Reuters reported the shift from Houston as Middle East barrels began rushing back into the market.
U.S. Energy Secretary Chris Wright told the Reuters Global Energy Forum in New York that roughly 20 million barrels of oil left the Strait of Hormuz in the previous 24 hours, calling the volume a return to normal flows. Shipping data showed three stranded tankers carrying about 5 million barrels of crude exiting the strait, two of them bound for Asia. The interim deal between Iran and the United States has helped free cargoes that sat idle during the conflict.
Neil Crosby, head of research at Sparta Commodities, said the market faces a mini glut as physical supply pours out of the Arab Gulf and demand needs to be tempted back. Bob Yawger, director of energy futures at Mizuho, said traders are selling the August contract aggressively as the flood of Middle Eastern barrels reaches buyers, with discounts spreading across global cargo grades.
The flip into contango caps a week of fast moving signals out of the Gulf. A supertanker was provisionally booked earlier in the week for a Persian Gulf to India voyage at roughly 897% of the benchmark rate, and marine insurers publicly backed the diplomatic push to keep Hormuz open. Iran could also lift sales further during its temporary reprieve from U.S. sanctions, putting still more barrels on the water.
For shipowners, charterers, and refiners, the shape of the curve now matters as much as the headline price. Contango rewards storage and front loaded buying, pressures freight on prompt voyages, and pushes traders toward cheaper forward barrels. After months of backwardation driven by war risk, the curve is telling the physical market that the immediate scramble for crude is easing.