Suspicious Trading Activity
The Department of Justice is investigating a series of suspiciously timed trades in the oil market totaling over $2.6 billion. These trades occurred just before major announcements by President Trump and a top Iranian official regarding the Iran war. The DOJ, along with the Commodity Futures Trading Commission, is probing at least four of these trades where investors bet oil prices would drop right before they did.
Key Trade Dates
On March 23, traders bet over $500 million that oil prices would fall 15 minutes before President Trump announced he would delay attacks on Iran's power grid. Hours ahead of a temporary ceasefire announced by Trump on April 7, traders bet $960 million that oil prices would fall. Twenty minutes before Iranian Foreign Minister Abbas Araghchi posted on social media on April 17 that the Strait of Hormuz was open, traders bet $760 million that oil prices would fall. On April 21, traders placed bets worth $430 million that oil prices would fall 15 minutes before Trump announced he would extend the ceasefire.
Iran Reviews US Proposal
Iran is reviewing a U.S. proposal to end hostilities. Esmaeil Baqaei, a spokesperson for the Iranian Ministry of Foreign Affairs, told the ISNA news agency that Iranian officials are reviewing the proposal. President Trump threatened Iran against rejecting the deal.
Strait of Hormuz Control
Iran's IRIB state television network reported that maritime transit should be governed and enforced by Iran's navy. The report added that all vessels are waiting for Iran's permission and the approval of the Islamic Revolutionary Guard Corps Navy to pass through the Strait of Hormuz. Lloyd's List reported that Iran has created a new Persian Gulf Strait Authority to approve ship transits and collect tolls in the Strait of Hormuz.
Ceasefire Efforts
Pakistan's Foreign Ministry spokesperson Tahir Andrabi said that agreements have reportedly been reached regarding easing the blockade in exchange for a gradual reopening of the Strait of Hormuz. A fragile ceasefire between the U.S. and Iran has largely held since April 8. President Trump said that if "Iran agrees to give what has been agreed to" the war would be over.
Impact on Global Markets
Oil prices tumbled more than 2% on Thursday, with international benchmark Brent crude and West Texas Intermediate in the U.S. both below $100. Gasoline prices across the U.S. surged to an average of $4.54 a gallon on Wednesday. The price of regular gas has jumped 52%, or $1.56 per gallon, since the start of the Iran war in late February.
While the U.S. and Iran negotiate a resolution to the conflict, the U.S. Treasury Department announced sanctions on Iraq’s deputy oil minister, Ali Maarij Al-Bahadly, for helping Iran evade sanctions and export its oil through Iraq.
For example, on April 7, traders bet $960 million that oil prices would fall hours before President Trump announced a temporary ceasefire, not just before the announcement.