Brent: Backwardation cushions risk assets – Deutsche Bank

Deutsche Bank’s Henry Allen notes that despite the Iran conflict and higher long-dated Oil prices, risk assets and equities have remained resilient as the Brent curve stays heavily backwardated. He argues markets still see the Oil shock as temporary, with 6‑month Brent futures only just above $90/bbl, limiting the likelihood of a deeper selloff for now.

Backwardated curve signals temporary oil shock

"Indeed, yesterday saw oil futures for December 2026 reach new intraday highs, whilst government bond yields are trading around multi-year records as well."

"By contrast today, the oil curve remains heavily backwardated – the gap between front-end futures and 6-month futures has consistently remained elevated."

"Whether or not that ultimately proves correct, those expectations are reflective of a belief that this would be a temporary shock, hence risk assets have been resilient."

"But even there, the 6-month Brent future is still only just above $90/bbl, and declining energy intensity means that a given level for oil prices doesn’t create the economic shock it used to."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)