If the Strait of Hormuz doesn't open soon, as seems likely, there will be a massive economic crash

[GreatGazoo]

42. "futures price contracts probably isn't a good predictor of actual future prices" -- meaning spot prices, yes

But if the buyer is taking delivery in Cushing in September then the price of that contract today is the price. If I buy December delivery at $80 then they are obligated to deliver X amount of WTI to my trucks, railcars or pipeline in Cushing Oklahoma in December and I pay $80 even if spot goes to $200.

If I am just an investor then yes I have to resell that futures contract prior to the expiry date. I think we are focused on two different things -- futures as an investment vs futures as a way that major users of oil control and determine their future expenses.

I think we agree on all of that (?) but backwardation means the all of the global participants in the oil markets, both buyers and sellers collectively, are predicting that the supply vs demand in December will produce a lower price than supply vs demand right now.

Front month spiked but the December end didn't move much:

Since war broke out between the U.S., Israel and Iran on February 28, the crude oil futures curve has moved into a steep backwardation, a situation that persists even after the announcement of a temporary ceasefire on April 7. Prices for WTI crude oil futures delivered in December 2026 have been as much as $40 below prices for delivery in May or June (Figure 1). This suggests that traders expect the current supply disruptions caused by the effective closure of the Strait of Hormuz will most likely prove to be short-lived, with spot prices perhaps falling to the mid-$70s by year end. But what does the historically extreme backwardation imply for investors?

https://www.cmegroup.com/insights/economic-research/2026/implications-of-wti-oil-futures-in-backwardation-amid-the-supply-crunch.html