A trader made a $920 million short bet on crude oil just before a report about a potential US-Iran deal surfaced, leading to significant market movement and scrutiny. This activity has drawn attention from regulators and influenced prediction markets.
A mystery trader shorted approximately $920 million in crude oil 70 minutes before Axios reported on a potential agreement between the U.S. and Iran. The trade, executed at 3:40 a.m. ET, was unusually large for that time. Following the report, oil prices dropped by over 12% by 7:00 a.m., resulting in a paper gain of around $125 million for the trader.
Former President Donald Trump then stated on Truth Social that bombing would start at a much higher level if Iran rejected the proposal. Kobeissi noted that nearly 10,000 short contracts appeared within minutes, lacking a clear news catalyst. Subsequently, the Axios report at 4:50 a.m. ET caused WTI to fall below $93 a barrel.
Similar trades have occurred recently, including a $760 million short before Iran's foreign minister announced the Strait of Hormuz was “fully open” and a $950 million bet before a ceasefire announcement in April. Representative Ritchie Torres (D-NY) has reported around $2.1 billion in suspicious trades from April, requesting a joint investigation by the SEC and CFTC. The CFTC has reportedly begun its own investigation.
Polymarket’s US-Iran ceasefire markets reacted to the Axios report, initially rising and then falling as Iran downplayed the deal. The May 15 permanent peace deal contract increased from about 5% to 22% before stabilizing near 15%, with nearly $77 million in volume. A deal by June 30th is currently priced at 47%.
Ebrahim Rezaei, spokesperson for Iran’s parliament’s foreign policy and national security committee, described the Axios report as more of an American wish list. Chevron CEO Mike Wirth had cautioned about potential oil supply shortages due to the closure of the Strait of Hormuz. Iran introduced a new “Persian Gulf Strait Authority” to regulate vessel transit through Hormuz, which tempered optimism from the Axios report. The Islamic Revolutionary Guard Corps navy stated that safe passage would be ensured under new procedures.
Key Takeaways:
- A large, well-timed oil trade preceded news of potential US-Iran deal, raising suspicions.
- Regulatory bodies are scrutinizing recent trades for potential market manipulation.
- Prediction markets initially reacted positively to the news before adjusting based on Iran's response.
- Geopolitical tensions and regulatory actions continue to influence market predictions and oil prices.