Brent crude oil trading above $100 has not led to a 1970s-style shock, based on current market pricing. The market is discounting a short conflict and lower oil prices ahead.
The Brent futures curve is sharply backwardated, with 6- and 12-month contracts trading well below the spot price. This pricing implies expectations of a pullback in prices over the coming months.
Backwardation Signals A Temporary Spike
In 2022, 6-month Brent futures rose above $100 per barrel, which reflected expectations of a more sustained oil disruption. In the current move above $100, the futures curve does not show the same pattern.
The article states that this structure in the futures market reduces how far other asset classes price in stagflation risk. It also notes the piece was produced using an AI tool and reviewed by an editor.
We are seeing Brent crude oil prices push above $100 a barrel, but the futures market is signaling that this is a temporary spike caused by a short-term conflict. The market is in a state of sharp backwardation, where contracts for future delivery are priced much lower than the current spot price. For instance, the May 2026 contract is hovering near $105, while the contract for October 2026 delivery is trading closer to $92.
This structure suggests that traders could implement bearish calendar spreads in the coming weeks. By selling the expensive front-month contract and buying a cheaper deferred contract, traders can profit if the price gap narrows as expected. This strategy is a direct play on the market’s belief that the current geopolitical risk premium will fade.
Using options, traders might consider selling out-of-the-money call spreads on near-term contracts to collect premium, betting the price spike has limited room to run. Another approach is buying put options that expire in the summer months. This provides a direct, though higher-cost, way to profit if prices fall back toward the levels indicated by the futures curve.
How This Affects Stagflation Risk
When we looked back from our perspective in 2025, the situation in 2022 was different, as even 6-month Brent futures had climbed above $100, showing a market pricing in a sustained shock. Today’s backwardation, while significant, is not at the record levels we saw then, suggesting less panic about long-term supply disruptions. The main risk to these trades is if the market is wrong and the conflict escalates, which would cause the entire curve to shift higher.
The market’s belief in a temporary oil spike is what is preventing a wider stagflation panic, even with recent stubborn inflation reports. The latest CPI data for March 2026 came in at a sticky 3.8%, but the lack of a sustained energy shock is keeping a lid on fears. As long as the oil curve remains in backwardation, it will likely limit how aggressively other assets price in a worst-case economic scenario.
