The U.S. Commodity Futures Trading Commission (CFTC) is investigating a $950 million oil futures bet placed on the CME and ICE exchanges just before former President Donald Trump posted about a potential Iran ceasefire. According to a Bloomberg report, the CFTC is examining two specific trading episodes over a two-week period where trading volume spiked to record levels immediately prior to major geopolitical announcements.
The regulator's request includes Tag 50 data, which can identify the specific companies or entities behind the trades. The investigation was prompted by extreme price volatility in oil markets following the outbreak of conflict in the Middle East, which disrupted supply and sent prices soaring. Prices then experienced sharp swings as traders attempted to predict when tanker traffic through the critical Strait of Hormuz might resume.
In response to the investigation, CME Group stated: "We vigorously surveil our markets and work closely with the CFTC to oversee trading activity." The exchange notably added, "Importantly, any review of market behavior must include all venues, including prediction markets like Polymarket and Kalshi that list related products with little to no visibility."
The probe has drawn significant political attention. Senator Elizabeth Warren issued a statement on Wednesday, declaring: "These suspicious oil trades look like an appalling example of insiders rigging the market." She urged further action, stating, "The probe is a start, but CFTC and the SEC should do their job and investigate anything that looks like insider trading by Trump Administration officials." This has pulled the Securities and Exchange Commission (SEC) into the matter, though the CFTC remains the lead agency.
The investigation unfolds against a backdrop of severe strain in the physical oil market. U.S. oil exports surged to a record 5.2 million barrels per day last week, an increase of over 1 million barrels from the prior week, as buyers in Asia and Europe scrambled to replace crude lost from the Middle East. The U.S. also exported approximately 7.5 million barrels of refined products, including gasoline and fuel oils.
This export boom, combined with a sharp drop in U.S. crude imports, unexpectedly drew down inventories, helping to flip U.S. oil prices higher by almost 1% to $92.12 per barrel on Wednesday morning. Analysts at JPMorgan warned that stronger competition for U.S. barrels could push domestic prices higher, exacerbating inflation pressures and potentially lifting U.S. petrol and diesel prices, which would increase political pressure on the Trump administration.
Since the war began on February 28, average U.S. petrol prices have risen by about $1 to $4.10 per gallon, while diesel sits at $5.63, close to its record high of $5.81. This trend contradicts Trump's 2024 campaign promise to cut energy costs in half within a year of taking office.
