DOJ Investigating Suspicious Iran War Oil Trading Trend: Report
Evidence and reporting reviewed in the article suggest that during the Iran-related conflict, some traders may have used insider details to profit from oil-price moves.
It cites an ABC News report saying the U.S. Department of Justice and the Commodity Futures Trading Commission are investigating several large oil futures transactions-totaling more than $2.6 billion across four reviewed trades-that were made shortly before key moments in the war, when predictions that oil prices would fall appear to have been timed in a highly specific way. The piece highlights examples tied to announcements and developments involving U.S. actions and events around the Strait of Hormuz, including bets placed minutes to hours before public announcements.
The article also notes that such activity appears consistent with wider concerns raised by The Guardian about unusually synchronized event betting through online platforms. It references complaints alleging smaller groups of “insiders” profited from bets tied to events they allegedly knew about in advance,and it quotes legal experts explaining that proving illegality can be difficult-because some trades may be based on lawful information or luck-while also pointing out that the scale and timing make some bets look notably suspicious.
Ups and downs in the war with Iran may have been an opportunity for insiders betting on oil prices to make a killing, according to a new report.
The report from ABC News said the Department of Justice is taking a close look at several oil market trades that came just before critical moments in the war with Iran.
In four transactions under review, the Justice Department and the Commodity Futures Trading Commission are examining trades that netted more than $2.6 billion to individuals who bet oil prices would drop immediately before they did so.
From the start of the conflict on Feb. 28, the oil market has been up and down depending upon Iran’s strategy, America’s response, and expectations that oil might again flow freely.
The London Stock Exchange Group highlighted the trades, which began on March 23, when 15 minutes before President Donald Trump announced a delay on attacks against Iranian infrastructure, a $500 million bet was placed that oil prices would dip.
On April 7, only hours ahead of Trump’s announcement of a temporary halt in hostilities, a $960 million bet was placed that oil prices would fall.
On April 17, 20 minutes before Iran said the Strait of Hormuz would be opened, a $760 million bet was placed that oil prices were going to drop.
On April 21, 15 minutes before the ceasefire was extended, $430 million worth of bets was placed predicting oil prices were going down.
The Guardian noted last month that the conflict has been accompanied by unprecedented betting on events through online betting platforms, with many bets being precisely timed to events in the war.
For example, according to one complaint before the Commodity Futures Trading Commission, six so-called insiders reaped $1.2 million from betting when former Iranian Supreme Leader Ali Khamenei would be killed.
Reining this in through legislation is a complex task, if it can be done at all, one expert said.
“Is the problem that we don’t have legislation or that we don’t have enforcement capabilities?” Joshua Mitts, a law professor at Columbia University, said.
“To have a law that can’t really be enforced effectively given the technological limitations, it’s sort of putting the cart before the horse,” he said.
The oil price bets appear suspicious, another expert said.
“We can’t say from the outset whether any of these trades were illegal. Any one of them could be lucky, and any one of them could be based on lawful information,” Andrew Verstein, a law professor at the University of California at Los Angeles, said.
“But many of them bear the hallmarks of suspicious trades that would naturally warrant investigation,” he added.
Trying to regulate prediction markets will be an uphill task, Craig Holman, a government affairs lobbyist for Public Citizen, acknowledged.
“Not only the timing, but the amount of these bets makes it look very likely that someone had insider knowledge… and placed very, very substantial bets on it,” he said.
“It’s a wild west phase, when we’re talking about the prediction market industry, and now it’s spilled over into the stock market as well.”
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