Brent Curve Flattens After War Spike: Crude Oil Corrects but Risk Premium Persists

Brent and WTI futures corrected sharply on 1 April, but the entire curve remains deeply backwardated with front-month Brent still around triple digits in USD, reflecting a persistent geopolitical risk premium despite the pullback.

After an exceptionally volatile March driven by the Iran war and the Strait of Hormuz disruption, crude has stepped back from its intramonth highs near 120 USD/bbl, yet prices across 2026–2027 remain elevated versus pre-war levels. The Brent curve shows a steep decline from about 100 USD/bbl for June 2026 toward the low 70s by 2029–2031, signaling expectations of gradual supply normalization and some demand headwinds. However, ongoing military tensions, record price swings and policy uncertainty keep downside limited in the very short term, with refined product markets and consumers still facing tightness.

📈 Prices & Curve Structure

The ICE Brent and NYMEX WTI strips as of 1 April 2026 show a classic war-driven backwardation: high nearby prices with a progressive decline along the curve.

• Front Brent (Jun 2026) settled at 100.34 USD/bbl, down 3.6% on the day; WTI May 2026 closed at 98.92 USD/bbl, -2.5%.
• The Brent spread from Jun 2026 (100.34) to Dec 2026 (77.92) exceeds 22 USD, indicating strong near-term scarcity.
• Further out, Brent eases from about 73–72 USD/bbl in 2028 to roughly 68–67 USD/bbl by 2032–2033, with daily moves under -1.1% there, showing a calmer long end.

Assuming an indicative EUR/USD of 1.10, front Brent is roughly 91–92 EUR/bbl and WTI about 90 EUR/bbl. The nearby curve thus still embeds a substantial war and logistics premium, even after a 40%+ rally in March and the subsequent correction.

Benchmark	Nearest Liquid Contract	Price (USD/bbl)	Approx. Price (EUR/bbl)	Daily Change
Brent	Jun 2026	100.34	≈91.2	-3.62%
WTI	May 2026	98.92	≈89.9	-2.49%
Brent	Dec 2026	77.92	≈70.8	-2.18%
Brent	Dec 2028	70.75	≈64.3	-1.20%
Brent	Dec 2032	67.09	≈61.0	-1.06%

🌍 Supply, Demand & Geopolitics

The dominant driver is the Iran war and the associated Strait of Hormuz crisis. The chokepoint closure and attacks on infrastructure such as Kharg Island and Saudi facilities have produced what the IEA describes as an historically large supply disruption, with up to 20% of global oil and LNG trade affected by shipping risk.

OPEC output has fallen sharply due to war-related outages, with estimates of multi-million-barrel-per-day reductions compared with pre-war levels, even as some Gulf producers try to keep flows moving via alternative routes. Recent data point to Iranian production slipping around late March, exacerbating the tightness in medium sour grades most exposed to Hormuz.

On the demand side, the price shock is feeding directly into inflation and consumer fuel costs. EU officials warn that even a rapid end to hostilities would not bring prices back to pre-war norms quickly, while U.S. gasoline has moved above 4 USD/gal for the first time since 2022. This reduces demand elasticity in the short run but raises risks of slower growth and eventual demand destruction if triple‑digit crude persists.

📊 Market Fundamentals & Volatility

Fundamentals are tight in the prompt market but look more balanced further out. March saw Brent rally over 40%, briefly touching highs near 120 USD/bbl before retracing, and a single-day range from roughly 119 to mid‑80s was reported as a record in dollar terms. This reflects not only physical tightness but also extreme speculative activity, with headlines and military updates triggering outsized intraday moves.

The current Brent strip – steeply backwardated from ~100 USD/bbl in mid‑2026 to high 60s beyond 2030 – signals that traders expect additional supply (from OPEC+, U.S. shale and others) and some demand moderation to gradually unwind the war premium. However, the flatness of the back end versus pre‑war forecasts also suggests the market does not anticipate a return to very low price levels; structural demand remains robust in developing Asia despite higher prices.

Inventory data are becoming more important as a cross-check. Early private‑sector estimates for late March showed modest draws rather than the large builds that would be needed to sustainably cap prices, keeping the front of the curve supported. Official statistics in the coming days will be closely watched for confirmation.

🌦️ Short-Term Outlook & Weather

Unlike in agricultural markets, near-term weather plays only a secondary role for crude; the primary constraints are war-related logistics and OPEC+ production decisions. That said, seasonal demand patterns matter: the market is now transitioning from winter heating demand in the Northern Hemisphere toward the early summer driving season, which will keep product demand relatively firm in OECD economies.

In major consuming regions (U.S., Europe, Northeast Asia), the 7–10 day temperature outlook points to mostly seasonal or slightly above-normal conditions, providing no major downside shock to demand. As a result, geopolitics and policy – including any steps toward reopening Hormuz or expanding sanctions waivers – will remain the dominant short‑term price levers through early April.

📆 Trading Outlook (Next 1–2 Weeks)

• Bias: Moderately bullish in the front months, with downside limited as long as Hormuz remains disrupted and OPEC outages persist. Deep backwardation offers attractive roll yield for length but also signals high headline risk.
• Producers / Hedgers: Consider layering in additional hedges in the 2027–2030 part of the curve where Brent trades in the high‑60s to low‑70s USD/bbl (≈61–65 EUR/bbl). The current back‑end pricing still embeds a war premium but is far less extreme than the front.
• Consumers / Refiners: Maintain or increase coverage on prompt and 2H‑2026 barrels while backwardation is high; use any sharp risk-off corrections (headline-driven) to extend hedges rather than chase rallies.
• Speculative Accounts: Volatility is elevated and headline-driven; favor options structures (e.g., call spreads, collars) over large outright futures positions, and manage gap risk around political deadlines (e.g., announced decision dates on Hormuz or ceasefire talks).

📍 3-Day Directional View (Key Benchmarks, in EUR)

• ICE Brent Jun 2026: Around 91–94 EUR/bbl; bias sideways to slightly higher as the market digests recent correction and awaits fresh war and inventory headlines.
• NYMEX WTI May 2026: Around 90–92 EUR/bbl; expected to track Brent, with inland U.S. fundamentals and logistical constraints keeping the Brent–WTI spread relatively narrow in the near term.
• Brent Cal 2027 Strip (avg): Roughly 68–72 EUR/bbl across the year; likely stable with limited movement unless there is a major diplomatic breakthrough or a new supply disruption.