Oil traders have been making bold moves in the face of geopolitical uncertainties, with speculators snapping up 3 million barrels worth of options contracts, Bloomberg data reveals. One particularly risky trade involved 3,000 lots of June $250 call options in US crude oil trading for just 1 cent each, akin to buying a lottery ticket with extremely low odds of winning but potentially high rewards if luck strikes. These seemingly improbable bets were reportedly paired with $25 put options, reflecting a mixed sentiment in bullish oil options that have surged to record levels amidst escalating tensions between Israel and Iran.
Despite these high-stakes trades, oil prices are currently trading lower on Tuesday following remarks from Federal Reserve Vice Chair Phillip Jefferson indicating a commitment to maintaining tight monetary policy in light of persisting inflation concerns. This development tempered potential price spikes driven by the Biden Administration’s promise of additional sanctions against Iran for its actions against Israel, underscoring the delicate balance of supply fears and market dynamics. The situation now hinges on Israel’s response to Iran’s aggression to determine the extent of the risk premium in crude oil, highlighting the ongoing influence of geopolitical factors on oil markets. As Brent crude nears the $90 per barrel mark, the industry remains on edge awaiting further developments.