Brent oil structure changes to reflect mounting supply risk as Iran tensions flare

By Anushree Mukherjee

July 14 (Reuters) - The price of Brent crude oil futures for prompt delivery rose on Tuesday to a one-month high over the price for oil six months later as traders priced in renewed risks to Middle Eastern supplies and shipping through the Strait of Hormuz.

The first-month Brent contract traded $8.92 a barrel above the sixth-month contract, its largest premium since June 10. A market structure in which prompt contracts trade at a premium to later ones is known as backwardation and is typically viewed as a sign of tight near-term supplies.

Brent's move follows a sharp escalation in tensions between the U.S. and Iran, including renewed military strikes and attacks on vessels near the strait, which have reignited concerns over the security of Middle East oil supplies.

"The return to backwardation signals that the market expects crude availability to remain constrained in the weeks ahead," Saxo Bank head of commodity strategy Ole Hansen said.

The structure contrasts with that in early July, when prompt Brent traded below later contracts, a more common structure known as contango and typically associated with ample near-term supplies. Recovering exports through the strait then eased supply concerns.

"For the moment, this is largely a paper move, with investors likely pouring back into the market following the latest escalation," said Neil Crosby, head of research at Sparta Commodities.

"We are seeing flows out of Hormuz slow, which could ... impact the physical market incrementally over the coming weeks if disruptions persist," Crosby added.

Middle East crude benchmarks Oman, Dubai and Murban also swung from discounts to premiums, signaling growing supply concerns.

Oil and gas tanker traffic fell to its lowest level since May 25, according to analysis from Kpler on Monday.

(Reporting by Anushree Mukherjee in Bengaluru, editing by Alex Lawler and Rod Nickel)