Overview
- Oil futures now trade in backwardation, a pattern that places today’s price above later contracts and signals tight supply from disrupted Strait of Hormuz flows.
- Traders expect the squeeze to ease over time, since the curve points to a temporary interruption rather than a long shutdown.
- The Strait of Hormuz carries about 34% of global crude oil trade, and it also moves liquefied natural gas, refined fuels, and fertilizers that feed key supply chains.
- Uncertainty over shipping insurance, the terms of any reopening, and possible damage to regional energy infrastructure keeps price swings elevated.
- Analysts urge staying invested while tilting toward likely winners from higher energy prices, citing Chevron, and they note gold as a potential buffer against geopolitical risk.