Iran War Sends Oil Curve Into Crisis Mode
What has been happening in the Middle East when it comes to markets won’t affect only headlines but could reshape the structure of the oil market from the physical barrel to the far end of the derivatives curve. As tensions escalate, physical traders are going to have to rethink their physical routes, and will have to recalibrate the forward curve - opposite to equity markets, oil markets use the forward curve to hedge, not spot. Because of that, you will also see a repricing of volatility, adjusting skew, and deployment of option structures…