LONDON, Jan 8 (Reuters) - The structure of the benchmark Brent crude oil futures market on Wednesday reached its widest since August 2024, reflecting concern of tightening supply and expectations of a revival in Chinese demand.

The premium of the first-month Brent contract to the six-month contract widened to $3.05 a barrel on Wednesday, the most since late August. The premium has risen by more than 50% so far this year.

Oil output from the Organization of the Petroleum Exporting Countries fell in December, partly due to losses in Iran, a Reuters survey showed. Concern of tighter supply from Iran and Russia due to sanctions is also boosting prices, analysts said.

"It looks as though sanctions might be working and the combination of declining Russian and Iranian exports supports the structure," said Tamas Varga of oil broker PVM.

A widening of the premium, a structure called backwardation, generally indicates a perception of tighter prompt supply. The opposite structure, where prices for nearby delivery are cheaper, suggests ample supply and is called contango.

"The tighter crude market is unmistakenly mirrored in the deepening Brent backwardation," Varga added.

In a further indication of tightness, the premium of the first-month Brent contract to the second month has almost doubled this year, rising from 40 cents a barrel on Dec. 31 to as much as 75 cents on Wednesday.

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https://www.reuters.com/business/energy/brent-oil-market-structure-tightens-supply-concerns-2025-01-08/