The Crude Oil Futures Curve Indicates "Prolonged Middle East Risk" ――Market Tensions Reflected in the Surge of Brent and the Risk in the Strait of Hormuz

Table of Contents

1. Introduction: Geopolitical Risks Revealed by the "Futures Curve"

2. What Happened: The Collapse of the Curve's "Smile"

3. Mechanism of the Rapid Expansion of Time Spreads

4. Changes in the Options Market and Volatility

5. The Strait of Hormuz and the Global Supply Network: Are There Alternative Routes?

6. Scenario Analysis: Conditions for $90/$105/$120 per Barrel

7. Direct Impact on Japan

8. Five Actions Companies and Investors Should Take

9. Upcoming Events to Watch

10. Conclusion: Focus on the "Curve" Rather Than the "Price"
    
    

1. Introduction: Geopolitical Risks Revealed by the "Futures Curve"

In the commodity market, not only prices but also the shape of the curve reflects supply, demand, and sentiment. The recent abrupt change in the curve indicates that the market consensus has incorporated a warning of a "prolonged scenario" rather than a "short-lived shock."ndtvprofit.com

2. What Happened: The Collapse of the Curve's "Smile"

• Front-month Brent: Up to 13% increase.

• December 2025 vs 2026: +$2.3 backwardation (two months ago it was -$0.9 contango).

• 3-month/6-month spread: Both expanded rapidly, with trading volume during Asian hours more than doubling the usual level. The background includes the view that Israel's limited attack on Iranian facilities will not end as "limited."
  ndtvprofit.com
  
  
  
  

3. Mechanism of the Rapid Expansion of Time Spreads

Backwardation represents a premium for "wanting it now," indicating inventory shortages or supply risks. The sudden shift from contango is the result of (1) hedge funds' short covering, (2) seasonal decline in commercial inventories, and (3) simultaneous occurrence of geopolitical risk premiums.reuters.com

4. Changes in the Options Market and Volatility

The implied volatility index reached a year-to-date high during Asian hours, and the call-put skew showed a strong call bias not seen since 2011. This is evidence that market participants paid premiums for "upside risk."ndtvprofit.com

5. Strait of Hormuz and the Global Supply Chain: Are There Alternate Routes?

• Throughput Volume: Approximately 20% of the world's seaborne crude oil (14 million b/d per day).

• Alternative Routes: Even the Saudi East-West Pipeline (up to 5 million b/d) cannot fully substitute.

• Expert Comment: ING's Patterson says, "If completely blocked, it will surpass $120/bbl."ndtvprofit.com
  As a result, rising marine insurance premiums and freight rates have already begun to affect spot shipping rates.
  
  
  
  

6. Scenario Analysis: Conditions for $90/$105/$120 per Barrel

* CIF: Cost, Insurance and Freight (Gasoline Equivalent)

7. Direct Impact on Japan

1. Refining Margin Pressure: High crude oil prices and high freight rates have a double impact.

2. Gasoline Prices: Currently 155 yen/L → Estimated to reach 170 yen range during shock.

3. Inflation Acceleration: Contribution to CPI +0.3pt from energy costs.

4. Exchange Rates: Yen buying due to risk-off vs. yen selling due to rising resource prices in a tug-of-war.

5. Policy Response: Flexibilization of national reserves release (about 180 days' worth), reconsideration of subsidy triggers.
   
   
   
   

8. Five Actions Companies and Investors Should Take

1. Strengthen Hedging: Cover sudden surges with call spreads rather than simple price hedging.

2. Increase Inventory: Logistics companies secure stockpiles before summer demand.

3. Shift to Alternative Fuels: Increase the ratio of LNG for power generation and secure portable stockpiles.

4. Reevaluate Supply Chains: Review the high dependency on crude oil from Hormuz.

5. Disclose ESG Factors: Reflect procurement risks in investor briefing materials to enhance credibility.
   
   
   
   

9. Upcoming Calendar Highlights

• June 15 Oman-U.S.-Iran Working-Level Talks

• June 19 OPEC+ Joint Technical Committee (JTC)

• Early July U.S. EIA "International Energy Outlook" Release

• Ongoing Israel-Iran Military and Diplomatic Developments
  
  
  
  

10. Conclusion—Focus on the "Curve" Rather Than the "Price"

Price surges are merely the "result," while the "cause" is reflected in the curve beforehand. This time, the spread of premiums to long-term contracts marks a decisive difference from a "transient shock." Reading the curve is a barometer for measuring the "depth" and "length" of risk. For Japan, re-examining energy security measures and individual corporate preparations are urgent tasks. Even if Middle Eastern tensions subside, the vulnerability of supply chains remains a persistent theme, representing a "new normal" that investors, policymakers, and citizens should share.

Reference Articles

• NDTV Profit, “Oil Curve Shift Shows Fears Of Protracted Mideast Conflict,” 13 Jun 2025. ndtvprofit.com

• Reuters, “Oil settles lower as traders gauge Middle East tensions,” 12 Jun 2025. reuters.com