Amanda Cooper
Traders bet more than half a billion dollars on the price of crude only 15 minutes before US President Donald Trump announced a five-day delay to attacks on Iran’s energy infrastructure that sent the market plunging, exchange data and Reuters calculations showed.
Having issued Iran with a Monday (US time) deadline to reopen the critical Strait of Hormuz or face its power plants being “obliterated”, Trump’s post on Truth Social at 11.05am Greenwich Mean Time (GMT) on Monday unleashed a powerful selloff in oil and natural gas.
Brent and US oil plunged as Trump indicated constructive talks between Washington
and Tehran were ongoing, prompting investors to price in the possibility of a de-escalation that could unblock the millions of barrels of oil now choked off in the Gulf.
LSEG data shows that between 10.49am and 10.50am GMT, traders placed bets on 5100 lots of Brent and WTI crude futures. The Financial Times reported $US580 million ($830 million) in bets were placed.
The data also shows that, in the minute in which those contracts changed hands, it was selling that dominated volumes. It was not possible to establish who traded the oil.
The roughly 2000-lot spike in volume in Brent futures at that point was far larger than those logged earlier in the day.
But turnover was dwarfed by what followed when Trump posted.
Over 13,000 lots of Brent and WTI crude futures, equivalent to 13 million barrels of oil, changed hands in the space of 60 seconds at 11.05am GMT.
Brent crude crashed to around $US99 a barrel from $US112 before the pre-announcement trades took place, while WTI fell to $US86 from closer to $US99 prior to Trump’s post.
The Intercontinental Exchange, on which Brent crude is traded, and CME Group, which owns the NYMEX exchange on which WTI trades, did not immediately respond to Reuters’ requests for
comment.
A White House spokesman told the Financial Times that it did not “tolerate any administration official illegally profiteering off of insider knowledge”. The US Securities and Exchange Commission declined to comment. The Commodity Futures Trading Commission was not immediately available for comment.
With around a fifth of the world’s daily oil supply cut off by the Middle East war, prices are still more than 40 per cent higher than they were when the conflict erupted in late February.
Trading volumes and volatility have exploded. On average, in the three years leading up to the war, some 300,000 lots of Brent crude futures would change hands on a daily basis.
That amount has doubled in the last four weeks as daily volumes have hit record highs above 1 million lots, equal to a billion barrels of oil.
For now, the Brent oil price is just below $US104 as uncertainty persists over the total hit to the global economy – and even over the status of negotiations, as Iran denied it was engaged in discussions with the US.
Reuters, wires
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