Oil Market Flips Bearish for First Time Since February as Hormuz Supply Rises

A key oil market indicator turned bearish on Monday for the first time since February. The shift follows a US-Iran agreement to reopen the Strait of Hormuz, which has increased crude flows from the Middle East. The indicator, known as contango, occurs when future oil prices are higher than current prices. It signals that traders expect ample supply in the near term, often a sign of weakening demand or rising production. Before this change, the market had been in backwardation—a bullish structure where current prices exceed future ones. That usually points to tight supply. The reopening of the Strait of Hormuz, a vital shipping route for about 20% of global oil, has eased fears of supply disruptions. More tankers are now moving crude from the region, pressuring prices. Analysts will watch whether this contango deepens, which could indicate a prolonged oversupply.