The Department of Justice and a federal agency overseeing certain betting markets are reportedly investigating a series of oil price bets placed shortly before President Donald Trump and an Iranian official made policy announcements regarding the Iran war.
Between March 23 and April 21, four multi-million-dollar trades were made betting oil prices would drop right before they did. The traders involved made more than $2.6 billion. However, the suspiciously timed trades have drawn the attention of the DOJ and Commodity Futures Trading Commission, which are now probing them, according to Reuters and ABC News.
Details of the Bets
Roughly 15 minutes before Trump announced he would delay an attack on Iran's power grid on March 23, traders bet more than $500 million that oil prices would fall, based on London Stock Exchange Group data shared with ABC News. Hours before Trump announced a temporary ceasefire with Iran on April 7, traders bet $960 million that oil prices would drop.
Approximately 20 minutes before Iran's Foreign Minister announced the Strait of Hormuz was open on April 17, traders bet $760 million that oil prices would dip. After the announcement, crude oil fell as much as 11 percent, Reuters reported. On April 21, just 15 minutes before Trump announced he would extend the ceasefire with Iran, traders placed a series of bets totalling more than $430 million that oil prices would fall.
Investigation and Concerns
The Independent has asked the Department of Justice and the Commodity Futures Trading Commission for comment. Trump's war with Iran has caused major disruptions in the Strait of Hormuz, which has experienced on-and-off closures after the U.S. began a blockade on Iran's ports. The Strait is an essential waterway responsible for transporting up to 34 percent of the world's oil production, leading to volatile global oil prices.
While predicting oil price fluctuations is not unusual, the timing of these trades has raised eyebrows. The data from LSEG, provided to ABC News, does not reveal the identities of those behind the trades and does not prove they were trading based on insider information.
Last month, Bloomberg reported that the Commodity Futures Trading Commission had requested data from CME Group Inc. and Intercontinental Exchange Inc., whose platforms were allegedly used to make trades on oil futures right before Iran war-related announcements.
Political Reactions
The reported investigation arises as some lawmakers have raised concerns about people with insider information using prediction markets to place bets on events. Senators Elizabeth Warren and Sheldon Whitehouse have asked Michael Selig, the head of the Commodity Futures Trading Commission, to investigate the oil bets made on March 23.
"This pattern raises serious questions about whether there has been recurring misappropriation of material nonpublic government information and about the extent to which individuals inside or outside the government have acted on such information," the senators wrote in a letter.
On March 24, the day after the first flurry of oil bets, the White House circulated a memo to staff cautioning them not to place bets on future markets related to the Iran war, the Wall Street Journal reported.
