Audio By Carbonatix
Prices of Brent crude oil for second-month delivery traded higher on Wednesday than prompt-delivery prices for the first time since the Iran war started in late February, signalling increased near-term supply.
Brent, the global benchmark, traded 12 cents higher for contracts delivering in September versus those with August delivery, implying the market is pricing in ample prompt supply but fewer barrels in the coming months.
"We have the prospect of a big rush in physical supply out of the Arab Gulf. So we are in a mini glut for now as demand needs to be tempted back," said Neil Crosby, head of research at Sparta Commodities.
Around 20 million barrels of oil have exited the Strait of Hormuz in the last 24 hours, U.S. Energy Secretary Chris Wright said at the Reuters Global Energy Forum in New York, describing the shipments as a return to normal flows.
Three stranded tankers carrying 5 million barrels of crude were exiting the strait on Wednesday, shipping data showed, as the interim deal between Iran and the U.S. helps unlock supplies stuck in the Gulf.
"People are selling the flood of oil coming to the market from the Middle East, and trying to unload contracts fast. There is a lot of selling in August," said Bob Yawger, director of energy futures at Mizuho, referring to the next contract delivery period.
Physical crude oil cargoes were selling at discounts across the globe, changing trade flows as markets come under pressure from fast-rising Middle Eastern supply. Iran could boost sales following a temporary reprieve from U.S. sanctions.
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