While you were sleeping on Wednesday, May 6, someone made over $125 million on the Iran War.
The Kobeissi Letter, a well-respected capital markets industry newsletter, published an analysis of the trade a few hours later:
According to our analysis, ~$920 million worth of crude oil shorts were taken 70 minutes before an Axios report claimed the US and Iran were near a "14-point" deal to end the war.
At 3:40 AM ET today, nearly 10,000 contracts worth of crude oil shorts were taken without any major news.
This is equivalent to ~$920 million in notional value, an unusually large trade for 3:40 AM ET.
At 4:50 AM ET, just 70 minutes later, Axios reported that the US is "close" to a "memorandum of understanding" to end the Iran War.
By 7:00 AM ET, oil prices had fallen over -12% with these crude oil shorts gaining approximately +$125 million.
Minutes later, Iran launched the "Persian Gulf Strait Authority" and oil prices surged +8%.
And yes: this was literally the inciting plot of Casino Royale.
To their credit, financial journalists and independent political analysts largely identified this trade as part of a larger pattern of suspiciously-timed big bets on both traditional oil markets (which would fall under CFTC and SEC regulations) and unregulated “prediction markets” like Kalshi and Polymarket.1 Some other notable examples from the first (clearly regulated) category:
NY Post: “At 6:50 a.m. on March 23, traders executed a massive volume in oil futures trades, about $580 million, 15 minutes before Trump posted on Truth Social about productive talks with Iran to de-escalate, sending oil prices tumbling and delivering quick profits to the traders.”
Reuters, April 8: “Traders place large $950 million bet on oil price falling hours ahead of ceasefire.”
Reuters, April 17: “Investors placed a bet worth about $760 million on a falling oil price around 20 minutes before Iran’s foreign minister announced on Friday that the Strait of Hormuz was open, another sizeable wager on the world’s most traded commodity ahead of major announcements in the course of the Middle East war.”2
Several outlets have reported that the Department of Justice and the Commodity Futures Trading Commission are investigating these and potentially other suspicious trades totalling at least $2.6 billion in trader profits. Paul Krugman’s excellent analysis is a must-read for anyone who cares about the broader pattern and why it matters:
As the BBC among others has documented, this isn’t the first time, or the second time, that this has happened. Again and again, just before Trump makes announcements that raise hopes about the reopening of the Strait of Hormuz, one or more “whales,” very large traders, sell large quantities of oil futures, almost instantly reaping big profits as prices fall.
What’s truly remarkable is that this keeps happening even though the pattern has become familiar. This tells us two things: The Trump administration is making no real effort to crack down on whoever is trading using inside information, and these inside traders are operating with a complete sense of impunity, assured that they can get away with it.
With respect to Mr. Krugman (and h/t to Noel Casler), there’s a third important takeaway: corruption at this scale is a massive national security vulnerability. America’s adversaries are absolutely tracking all of this financial malfeasance, which gives them potential leverage over whoever is profiting. And of course, there’s the massive damage that this kind of corruption and impunity does to the rule of law and American credibility around the world.
This is a massive story. Yet press coverage lives almost entirely in the business and markets section. Even as Congressional Democrat oversight has started to ramp up and even as more examples of the pattern have trickled in, it’s felt buried.
But why?
As we’ve talked about before, it’s much harder to cover something that isn’t happening than something that is happening. So: how does one document that a story isn’t getting the attention it deserves?
There are lots of ways journalists can cover the White House and get official comments. But I can’t tell you how many White House reporters have insisted to me that Trump is so much more accessible than Obama and Biden ever were. “He talks to us all the time on the plane” they say. “He takes all sorts of our questions at random Oval events!” “He’ll just pick up the phone and call reporters!”
I wanted to test that proposition. If accessibility is good because it allows journalists to ask President Trump questions directly, are they using that access to ask him about this particular tough topic?
