Investors wagered $950 million on falling oil prices only hours before the US-Iran ceasefire agreement was announced.
In yet another striking coincidence, investors placed a massive bet of approximately $950 million on the decline of oil prices, just hours before the United States and Iran announced a ceasefire. These significant market moves occurring right before a major political announcement by President Donald Trump curiously continue to repeat themselves. Specifically, on Tuesday, April 7, investors sold a total of 8,600 Brent and US crude oil futures contracts at 19:45 GMT, according to data from LSEG. Around 22:30 GMT that same day, Trump withdrew his threat to destroy "entire civilization" and announced a two-week truce with Iran, causing oil contract prices to plummet by about 15%, falling below $100 per barrel at the opening of the official session on Wednesday.
Major market moves
Placing large bets on the rise or fall of oil prices is not uncommon, as traders use these instruments to hedge large volumes of physical oil trade. However, such transactions are rarely executed in massive blocks, as traders typically prefer to spread orders across multiple markets and instruct brokers to execute the order algorithmically over several hours to avoid price slippage caused by their own bets. This latest wager follows similar movements on March 23, when investors sold $500 million in oil contracts just 15 minutes before a Trump announcement regarding the postponement of attacks on Iranian energy infrastructure, a move that caught markets by surprise and triggered a 15% drop in crude prices. In Tuesday's transaction, approximately 6,200 Brent contracts changed hands at 19:45 GMT, representing about 1% of the total daily volume, while 2,400 WTI contracts were traded at the same time, also accounting for roughly 1% of the daily volume.
Unusual volumes
Trading volumes and volatility have skyrocketed since the start of the conflict. On average, in the three years prior to the war, approximately 300,000 Brent contracts changed hands daily. This figure has doubled over the last four weeks, as daily volumes reached historical highs of over 1 million contracts, equivalent to one billion barrels of oil.
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