Multiple experts pointed out that the "front-running trades" exhibit obvious insider trading characteristics, profiting from geopolitical information.

Written by: Zhang Yaqi

Source: Wall Street News

The U.S. crude oil futures market experienced a massive amount of unusual trading before media reports regarding the easing of U.S.-Iran conflict were published. This advance bet worth billions of dollars has once again raised concerns about the use of geopolitical insider information for illegal trading.

On Wednesday evening Beijing time, just one hour before Wall Street News mentioned that the U.S. and Iran were close to reaching a ceasefire memorandum, approximately 17,300 contracts, totaling over 1.7 billion dollars, of West Texas Intermediate (WTI) near-month futures suddenly changed hands. Influenced by the expectation of easing tensions, WTI crude futures plummeted by 7.19 dollars that day, a decrease of 7%, closing at 95.08 dollars per barrel, while the U.S. stock market rose on hopes of a permanent end to the conflict.

Several energy market experts noted that the timing of this front-running trade was highly unusual, suggesting potential prior knowledge of the media report's content. Analysts warned that the emergence of suspicious trading patterns surrounding significant geopolitical news is further undermining investor confidence in market fairness.

This event has prompted direct intervention from U.S. lawmakers and scrutiny from regulatory authorities. Massachusetts Senator Elizabeth Warren publicly questioned whether such actions constitute insider trading, and according to previous reports by Bloomberg, the U.S. Commodity Futures Trading Commission (CFTC) is also investigating the related suspicious trading patterns.

Massive Trades "Precisely Front-Run"

The abnormal fluctuations in market data occurred precisely before the release of heavyweight news. According to Dow Jones Market Data, around 4:50 AM Eastern Time on Wednesday, Axios cited information from U.S. officials reporting that the White House believes the U.S. and Iran are about to agree on a one-page memorandum to end the conflict and set the framework for future nuclear negotiations. Previously, President Trump had repeatedly stated that the U.S. and Israel decided to attack Iran at the end of February to ensure that Iran could never develop nuclear weapons.

However, about one hour before this report was published, the trading volume of WTI near-month futures suddenly surged. The vast majority of trades were completed before 4:10 AM Eastern Time. When Axios's report finally made the news, crude oil trading volume spiked again.

Experts Question Illegal Trading Patterns

In response to this unusual surge in trading volume, several industry insiders told the media that it is evident that someone traded in advance while possessing insider information. Axios and the White House have yet to respond to requests for comments on the allegations.

Gregory Brew, a senior analyst at Eurasia Group focusing on the energy market and Iran issues, stated that trading volume early in the morning Eastern Time is usually quite low, making Wednesday morning's crude oil trading activity appear very unusual and suspicious.

Former president of Koch Global Partners and well-known energy trading expert Ilia Bouchouev agrees with this view. He pointed out that although Wednesday's trading occurred during London trading hours, which is relatively more concentrated than previous trades in inactive periods, "the pattern of illegal operations is clearly ongoing."

Two senior energy traders who requested anonymity also stated that these activities are sufficient to undermine confidence in the market. However, they added that it is difficult to definitively prove who conducted these trades and whether they were entirely inspired by insider information in practice.

Historical Abnormal Trades Trigger Regulatory Scrutiny

Since the outbreak of the Iran conflict, there have been multiple instances of suspected insider trading with precise timing in the crude oil futures market and predictive markets.

According to media reports, on April 7, the day before President Trump announced a temporary ceasefire agreement with Iran, a trader bet 950 million dollars against oil prices. About a week later, just 20 minutes before Iran announced that the Strait of Hormuz would remain open to commercial shipping, there was another suspicious crude oil trade worth 760 million dollars in the market. Since the conflict began, tanker traffic through that strait has been severely restricted. MarketWatch also reported in March on allegations of insider trading in predictive markets related to the conflict.

This recurring pattern of precise bets has raised the alarm among U.S. congressional members. Senator Elizabeth Warren posted a link on social platform X to a media report highlighting some of these cases last month, stating:

"Is this merely luck? To me, this is insider trading."

Regulatory authorities are also taking action. The CFTC is investigating suspicious trading patterns in the crude oil market related to influential Truth Social posts and media reports. A CFTC representative told MarketWatch on Wednesday that the agency neither confirmed nor denied whether investigations were underway.