Oil traders reacted immediately on Monday when Iran fired missiles at a US military base in Qatar, choosing to sell off crude rather than push prices higher.
Just hours before the attacks, former President Trump took to social media site Truth Social to urge traders to stay calm and not “give in to the enemy” by driving up oil prices. He demanded that prices come down immediately. Wall Street seemed to listen.
According to the Financial Times, the first rocket was launched at around 5:30 p.m. Doha time. Within seven minutes, Brent crude prices began to fall. After 20 minutes, prices had lost 3%. By 7:30 p.m., prices had plummeted to $71.48, a loss of 7.2%, the sharpest one-day drop in nearly three years.
The timing was shocking to observers. Missiles lit up the sky. People panicked. Television channels reported the news. But traders had already made up their minds. The United States, Israel, and Iran were not going to go to war. Jorge Montepeque, an analyst at Onyx Capital Group, texted after the missile hit, “It was all scripted, we knew the base was empty. I knew since June 18 that it was an abandoned base. We saw it.”
Traders use open sources to gain market insight
Since the Israel-Iran conflict erupted, oil traders have been glued to Twitter and open source intelligence (OSINT). “We’re all in the same boat, we’re monitoring every Twitter feed, every OSINT account, everything we can to understand the situation,” said one executive at a major trading firm.
Satellite analysis of Al Udeid Air Base in Qatar, which hosts about 10,000 US troops, showed the area was empty days before Iran’s response, signaling a more symbolic move than an actual attack.
So traders don’t believe in a crisis. They know that oil infrastructure is not affected. Iran, according to Rystad Energy, has even increased crude production during the war because it cannot refine enough at home. Demand is still met, and flows are not disrupted. With oil flowing, panic quickly dissipates.
Last week’s situation illustrates this. When Israel attacked Iranian gas and fuel facilities, oil prices jumped 5.5%. But when there were signs that Tehran wanted peace, the rally evaporated. The market only cared about whether Iran would attack tankers in the Strait of Hormuz—the 33-kilometer chokepoint that carries Gulf oil to the world.
Traders sell quickly, don't expect real oil supply shortage
The strategy has been clear for years. Geopolitical drama has pushed prices to new highs, but in the absence of real risk, traders have been quick to sell. “This is not a Ukraine-Russia situation where you have to restructure long-term trade flows,” said one oil expert. “The market is just trying to sell every rally.”
Montepeque asserts: “Reading the market correctly gives you an advantage, makes a profit, and when you want to make a profit, close the position to sell.”
Even before the conflict began, investors were skeptical that oil would sustain its rally. Opec+ increased supply, U.S. shale drillers pumped the market. Supply surged. Demand fell. RBC strategist Helima Croft said the White House did not need to tap the Strategic Petroleum Reserve because it believed “there are other sources of oil available in case of a major supply loss.”
As Donald Trump, in his role as mediator, helped Iran and Israel reach a ceasefire agreement, Brent crude oil prices continued to plummet 6.1% on Tuesday, falling below $67, lower than before the war.
Another factor that has dragged down prices is derivatives. Before the war, oil producers bought put options, profiting from falling prices. Traders sold futures to hedge against the risk. As Brent fell on Monday, those options came closer to triggering, triggering a new wave of selling that has now left oil prices lower than they were a week ago when it all began.
Source: https://tintucbitcoin.com/electronic-strategy-and-investment-price/
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