- Traders are placing their positions ahead of key Trump announcements.
- Unusual trading activity covers Brent, WTI, gasoline and diesel futures.
- Experts say trades appear well-informed ahead of policy changes.
A series of timely market bets on falling oil prices totaling as much as $7 billion in March and April, spread across multiple exchanges and types of fuels and derivatives, just ahead of major Iranian policy announcements by U.S. President Donald Trump, according to traders, market experts and Reuters analysis of exchange data.
The amount exceeds previously announced bets of $2.6 billion, which has already prompted the US administration to warn its staff against using non-public information for financial gain. The U.S. Commodity Futures Trading Commission (CFTC) is investigating, a person familiar with the matter said. Reuters in April, although the CFTC has yet to officially confirm that an investigation is underway.
Reuters could not establish who placed the bets and whether they originated in the United States or elsewhere. They included short positions, or bets that prices would fall, for derivatives such as ICE crude futures, CME, diesel and gasoline.
The betting took place on two major exchanges that host global benchmark exchanges in oil and fuel futures: the Intercontinental Exchange (ICE) and the Chicago Mercantile Exchange (CME). Both exchanges declined to comment. The CME is investigating the transactions, a source familiar with the matter said. Reuters.
The timely transactions sparked calls from legal experts and lawmakers for regulators to investigate whether they were based on inside information or leaks.
Traders first spotted unusual transactions on March 23. The trades were executed minutes before Trump announced a delay in threatening attacks on Iran’s power infrastructure, triggering a plunge in oil prices.
The same pattern repeated itself on April 7, before Trump announced a ceasefire with Iran that triggered a fall of up to 15% in benchmark Brent ICE futures. It happened again on April 17, when Iranian officials and Trump talked about reopening the Strait of Hormuz, and then again on April 21, when Trump extended the ceasefire.
Reuters and other media outlets reported these transactions on the most actively traded front-month contracts for the two global crude benchmarks, Brent LCOc1 and West Texas Intermediate CLc1. The value of these bets over these four days in March and April was approximately $2.6 billion, according to Reuters initial calculations.
The U.S. Department of Justice, the CFTC and the White House did not immediately respond to requests for comment.
However, further analysis of trading data on exchanges and contracts showed that traders executed similar bets on exactly the same dates and times for European diesel and US gasoline futures, as well as longer-term contracts for Brent and WTI, bringing the total to around $7 billion, based on Reuters calculations.
A put bet – or short sale – means that the person executing the trade borrows the derivative from a counterparty, sells it and buys it back later at a lower cost when the price falls, thereby retaining the remaining cash as profit.
On March 23 as well as April 7, 17 and 21, oil prices plunged by more than 10%. Reuters calculations show that a short seller with $7 billion could have made hundreds of millions of dollars in profits, depending on the timing of the bets.
The exchanges appear “well-informed” because they precede major announcements, said Adi Imsirovic, of the Center for Strategic and International Studies (CSIS), and a veteran oil trader. U.S. authorities, such as the CFTC, can access exchange data to trace who made the transactions and investigate if they decide, he added.
THURSDAY, ABC reported that the U.S. Department of Justice is investigating $2.6 billion in oil trades linked to the Iran war. The DOJ was not immediately available for comment.
The CFTC’s enforcement director said in March that the agency was aware of and “monitoring” speculation regarding insider trading in CFTC-regulated markets.
Billions of dollars
“Let’s stick to the facts. The volumes were very unusual. They were concentrated. They were ahead of key announcements,” said Jorge Montepeque of Onyx Capital Group, who helped design the modern oil pricing system at pricing agency Platts in the 1990s.
Brent crude and low-sulfur gasoil futures trade on the Intercontinental Exchange, while West Texas Intermediate crude and gasoline futures trade on the New York Mercantile Exchange, which is owned by CME Group.
On March 23, Trump announced a postponement of threats of attacks against Iranian power infrastructure at 11:05 GMT. LSEG data shows that between 10:49 and 10:50 GMT that day, traders placed bets on 20,000 lots of Brent and WTI futures. The sale was spread across first, second and third month contracts, worth approximately $1.35 billion, plus another $122 million in ICE gas oil – diesel – futures LGOc1, LGOc2, LGOc3 and $81 million in US gasoline futures RBc1, RBc2, RBc3, all worth a total of $2.2 billion.
“These quantities are not going to escape scrutiny,” said Robert Frenchman, an attorney at Dynamis LLP in New York who has previously worked on white-collar crime and insider trading cases.
Trump’s ceasefire announcement on March 23 triggered a decline in crude futures prices of up to 15%, one of the largest intraday declines on record. The announcement also sent gasoline and diesel futures down about 12%.
On April 7, sell orders on oil and gasoline prices worth $2.12 billion occurred between 1944 and 1945 GMT, well after the market had stabilized, a period when volumes are typically low. Minutes later, Trump announced a two-week ceasefire with Iran.
On April 17, nearly $2 billion worth of Brent, WTI, diesel and gasoline futures contracts were sold between 12:24 and 12:25 GMT, minutes before Iranian Foreign Minister Abbas Araqchi announced the reopening of Hormuz, followed by several social media posts from Trump and U.S. officials. On April 21, some $830 million worth of Brent and WTI contracts were sold just 15 minutes before Trump extended the ceasefire.
