Brent’s prompt spread — the difference between its two nearest contracts, and a closely followed metric — widened to as much as $1.99 a barrel in backwardation, from $1.53 on Friday. That’s a bullish pattern indicating concern about tight prompt supplies.
The US assault — which targeted sites at Fordow, Natanz, and Isfahan — dramatically raises the stakes in the confrontation and increases the premium that traders are pricing into the global energy market. Still, the extent of the gains will depend on how Tehran opts to respond to the US moves.
The oil market has been gripped by the crisis since Israel attacked Iran more than a week ago, with futures pushing higher, options volumes spiking along with freight rates, and the futures curve shifting to reflect tensions about tighter near-term supplies. The Middle East accounts for about a third of global crude output, and a sustained increase in prices would boost inflationary pressures worldwide.
“The market will closely watch Iran’s response — particularly whether it will move to disrupt Middle Eastern oil flows, directly or indirectly through its regional proxies,” said Muyu Xu, a senior crude analyst at Kpler Ltd. “If Iran blocks the Strait of Hormuz, even for one day, oil can temporarily hit $120 or even $150.”
There are multiple, overlapping risks for physical crude flows. The biggest centers on the Strait of Hormuz, should Tehran seek to retaliate by attempting to close the chokepoint. About a fifth of the world’s crude output passes through the waterway at the entrance to the Persian Gulf.
Iran’s parliament has called for the closure of the strait, according to state-run TV. Such a move, however, could not proceed without the explicit approval of Supreme Leader Ayatollah Ali Khamenei.
