These two charts show how the Iran war is causing markets to price in a longer oil supply crunch

For the oil market, aspirational rhetoric and coordinated action are telling one story, and the futures curve is telling quite another.

US-Israeli attacks against Iran, and the Gulf nation’s subsequent targeting of oil-producing nations in the region and attempts to deter the transport of oil through the Strait of Hormuz, have resulted in upheaval in global energy markets. Futures prices have pushed higher, closing above $100 per barrel for the first time since August 2022.

On Monday, US President Donald Trump said the war is “very complete, pretty much” and would be over “very soon.” That was later followed by member nations of the International Energy Agency agreeing to release 400 million barrels of oil from their reserves in a move to alleviate the supply crunch.

World powers other than Iran, and particularly US leadership, are trying to give the impression that this spike in energy prices won’t last long or be too severe.

Meanwhile, the story from the oil market this week has been the exact opposite: pricing in a longer stretch of higher prices.

Third-month Brent oil futures (for delivery in July, in this case) have jumped more than 10% this week. This would be just the 27th time that’s happened in the span of a week since February 1989. Usually, a big pop like that is associated with the outperformance of front-month futures because it’s a tied to a near-term supply shortage relative to demand. That’s what was going on the first week that markets were digesting this conflict, seemingly expecting a quick resolution.

Not so this time: this week is shaping up to be just one of seven in which third-month Brent futures rise 10% and outperform front-month futures, as of 9:20 a.m. ET. And for all those other instances, the outperformance of third-month futures was very modest. Again, not the case this time.

In other words, this looks to be (at least in my lifetime) the most aggressive repricing of not-so-short-term oil price risk. That’s an outcome that prediction markets are starting to coalesce around, as well. Event contracts suggest the implied probability is for the closing peak in front-month WTI futures by year-end to range from $135 to $140 in 2026. That’s meaningfully higher than the intraday peak of just shy of $120 seen on Sunday evening.

Read more: What analysts say they’re looking for next in the oil markets