Middle East Oil Benchmarks Shift as Supply Fears Ease

This structural flip represents a dramatic pivot from the market conditions seen in March, when backwardation peaked at $13 a barrel. While the previous state of constant backwardation reflected acute physical scarcity and extreme geopolitical risk, the current contango suggests that traders now view prompt supply as more accessible.

Should the agreement hold, millions of barrels currently held in storage on tankers across the Persian Gulf could reach the market, alongside restored production volumes. However, industry observers warn that the transition will be gradual. Even with a diplomatic breakthrough, consistent oil flows through the chokepoint and the normalization of tanker traffic will likely require weeks, if not months, of sustained stability to fully impact regional output levels.