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Oil Shifts to Contango as Saudi Aramco Goes Spot

7/5/2026

Summary

Oil Market Contango

Oil market moved from backwardation to contango on July 1, the first negative Brent front-month to six-month spread this year.
Brent closed at $71.72/bbl and WTI at $68.47/bbl, each down about 0.1%-0.3% for the week, while Kuwait’s output rose to 1.65 million bpd in June.
Saudi Aramco shifted to spot pricing for Asian sales; five supertankers (~10 million barrels) crossed the Strait of Hormuz, and traders hope U.S.–Iran talks will fully reopen it.

Summary

Saudi Accelerates Exports

Producers, including Saudi Arabia, are speeding oil shipments through the Strait of Hormuz before the U.S.–Iran memorandum’s August deadline.
Saudi Arabia moved over 10 million barrels out of the Strait, loading supertankers at Ras Tanura for Asian markets.
ING commodities strategists Warren Patterson and Ewa Manthey note a deepening Brent contango, signaling reduced immediate supply concerns.
Analysts say market sentiment is bearish and oil may be oversold despite the recent supply surge.

Summary

US Reopens Hormuz

The interim U.S.–Iran peace accord orders a partial reopening of shipping through the Strait of Hormuz, which began this week.
The United States is drawing down its Strategic Petroleum Reserve, with releases continuing as the newly available supply returns to market.
Analysts note that the Brent forward curve has shifted into contango, which may encourage speculative buying and signal a change in market sentiment beyond the immediate supply surge.

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Oil Market Contango

Oil market moved from backwardation to contango on July 1, the first negative Brent front-month to six-month spread this year.
Brent closed at $71.72/bbl and WTI at $68.47/bbl, each down about 0.1%-0.3% for the week, while Kuwait’s output rose to 1.65 million bpd in June.
Saudi Aramco shifted to spot pricing for Asian sales; five supertankers (~10 million barrels) crossed the Strait of Hormuz, and traders hope U.S.–Iran talks will fully reopen it.

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