A few billion-dollar bets on oil markets were placed just before major Iran-related announcements by US President Donald Trump and the timing is now raising eyebrows across global trading floors. According to traders, market experts and a Reuters analysis of exchange data, oil positions worth as much as $7 billion were placed across March and April on expectations of falling prices, just ahead of key political developments related to the Middle East and Iran. The total size of the bets is far higher than earlier estimates of $2.6 billion, which had already triggered concerns in Washington and warnings about the use of non-public information for trading.The positions were placed across major exchanges, ICE and CME, and included crude oil, diesel and gasoline futures, along with longer-dated contracts linked to global benchmarks.These exchanges, the Intercontinental Exchange (ICE) and the Chicago Mercantile Exchange (CME), host key global oil futures markets.
‘Off’ timing
The first unusual activity was recorded on March 23. Just minutes before Trump announced a delay to planned attacks on Iranian power infrastructure, traders placed large sell orders. Around 20,000 Brent and West Texas Intermediate contracts were traded within a short window, along with diesel and gasoline positions. The total value for that day was about $2.2 billion.After the announcement, oil prices dropped sharply, with crude falling as much as 15% and fuel prices down around 12%.A similar pattern followed on April 7, when about $2.12 billion in sell orders were placed after trading activity had slowed for the day. Minutes later, Trump announced a two-week ceasefire with Iran, triggering another drop in oil prices.On April 17, nearly $2 billion in oil and fuel futures were sold just before remarks from Iranian officials and social media posts from Trump about reopening the Strait of Hormuz.On April 21, around $830 million worth of oil contracts were sold shortly before Trump extended the ceasefire.Across these four days, Reuters estimates about $2.6 billion in trades were placed in front-month crude contracts alone. A wider look across additional markets, including diesel, gasoline and longer-term oil contracts, raises the total exposure to roughly $7 billion.Short selling is a bet that prices will fall. Traders borrow contracts, sell them, and later buy them back at a lower price to make a profit.Based on the scale and timing, a trader holding $7 billion in such positions could have made hundreds of millions of dollars, depending on execution.
Regulatory scrutiny
The trades are now under regulatory scrutiny. The US Commodity Futures Trading Commission (CFTC) is investigating the activity, a person familiar with the matter told Reuters in April, although the regulator has not confirmed any formal probe. The CME Group is also reviewing the trades, according to a source familiar with the matter. ICE and CME both declined to comment.“All federal employees are subject to government ethics guidelines that prohibit the use of non-public information for financial benefit,” a White House spokesperson was cited by Reuters as saying.Market participants have also called the timing unusual. “Let’s stay with the facts. The volumes were highly unusual. They were concentrated. They were ahead of key announcements,” said Jorge Montepeque of Onyx Capital Group.Adi Imsirovic of the Center for Strategic and International Studies (CSIS) said that the trades appeared “well informed”, adding that regulators have the tools to trace trading activity through exchange data.
