The U.S. Commodity Futures Trading Commission is investigating a series of oil futures trades that were placed shortly before major policy shifts by President Donald Trump related to the war in Iran, a person familiar with the matter said on Wednesday. The probe focuses on trading of oil futures contracts on platforms belonging to CME Group and Intercontinental Exchange, with investigators examining at least two instances of trades made on March 23 and April 7.
The data requested from the exchanges includes the so-called Tag 50 identifications of the entities behind the trades, which would allow regulators to trace the individuals or firms that placed the bets. A spokesperson for the CFTC declined to comment on the matter. ICE and CME did not immediately respond to requests for comment.
What Trades Are Being Investigated?
On March 23, oil and stock futures worth billions of dollars were traded approximately 15 minutes before Trump announced that previously threatened strikes on Iranian energy infrastructure would be delayed. The president’s comments in a Truth Social post sent crude prices plummeting and equities soaring.
A similar pattern was observed ahead of Trump’s April 7 announcement of a two-week ceasefire with Iran. Futures activity increased significantly in the hours before the news, which caused both oil and gas prices to plunge. Investors placed an estimated $950 million bet on falling oil prices just hours before the ceasefire was announced.
How Much Money Was at Stake?
Approximately $760 million worth of oil futures contracts changed hands in less than two minutes following the March 23 announcement, according to Dow Jones Market Data. The April 7 trades were even larger, with nearly $1 billion in downside bets placed shortly before the ceasefire news broke.
If the trades were based on advance knowledge of the policy shifts, the profits could run into the tens of millions of dollars. The CFTC is working to determine whether the trades were legitimate market positioning or whether they involved the misuse of material non-public information.
What Has the White House Said?
The White House circulated an internal memo to staff on March 24, the day after the first suspicious trades, warning employees against improperly leveraging their positions to place bets in futures markets. The email, sent by the White House management office, reminded staff that ethics rules prohibit government employees from using nonpublic information for financial gain.
White House spokesman Davis Ingle dismissed allegations of wrongdoing, telling the Wall Street Journal that “the only special interest that will ever guide President Trump is the best interest of the American people.” He added that “President Trump has been crystal clear: while he seeks a strong and profitable stock market for everyone, members of Congress and other government officials should be prohibited from using nonpublic information for financial benefit.”
What Are Lawmakers Saying?
Senator Elizabeth Warren and Senator Sheldon Whitehouse have both called on the CFTC to investigate the unusual trading activity. In a letter to the CFTC chairman, Warren noted that the March 23 activity erupted in the minutes before Trump announced talks with Iran, with no public catalyst that would have signaled the move.
Representative Ritchie Torres pushed regulators on Tuesday to investigate the burst of oil market activity that hit within a one-minute window ahead of the ceasefire announcement. The lawmakers argue that the timing raises serious questions about whether government information has been leaking ahead of time.
What Is the CFTC’s Position on Insider Trading?
CFTC Enforcement Director David Miller said in late March that the agency was monitoring oil futures trading for potential irregularities, while declining to comment on any specific investigations. Miller has made clear that insider trading violates the Commodity Exchange Act and the agency’s regulations’ anti-fraud provisions, and that the division will aggressively detect, investigate and, where appropriate, prosecute insider trading.
The CFTC has identified energy markets as a particular area of focus, with Miller characterizing manipulation there as “particularly and perhaps uniquely harmful” given the broad inflationary effects of energy price increases.
What Happens Next?
The CFTC can request data directly from CME for WTI trades since Nymex is based in New York. However, any request regarding Brent crude trades needs to be made via the UK’s Financial Conduct Authority because Brent trades in London. The investigation is ongoing, and no charges have been filed.
FAQs: CFTC Oil Trading Investigation
Q: What trades is the CFTC investigating?
A: Oil futures trades placed shortly before Trump’s March 23 announcement delaying strikes on Iran and his April 7 announcement of a two-week ceasefire.
Q: How much money was involved?
A: Approximately $760 million in oil futures traded before the March 23 announcement, and nearly $1 billion in downside bets before the April 7 ceasefire.
Q: What is the CFTC looking for?
A: Whether traders used material non-public information to profit from the policy shifts.
Q: Has the White House responded?
A: Yes. The White House sent an internal memo warning staff against using nonpublic information for financial gain.
Q: What have lawmakers said?
A: Senators Warren and Whitehouse and Representative Torres have all called for investigations into the suspicious trading.
Q: What is the CFTC’s position on insider trading?
A: The agency has made insider trading a top enforcement priority and is actively monitoring energy markets.
Disclaimer: This information is based on inputs from news agency reports. TSG does not independently confirm the information provided by the relevant sources.
