At the same time, as shown in figure 3, which plots the difference between the spot price and the futures price, the current price is still greater than the far futures price, representing a phenomenon known as backwardation.6 Because of such backwardation, this oil price shock still seems to have an important temporary component.
Jameel Ahmad: Launch of Environmental and Social Risk Management Manual Keynote address by Mr Jameel Ahmad, Governor of the State Bank of Pakistan, at the Sustainable Banking Conference, Karachi, 9 November 2022.