Oil trades surged just before Trump’s post on Iran talks. Some experts are suspicious.

Mr. Trump’s announcement, which he posted on social media shortly after 7 a.m. EST on Monday, caused oil prices to tumble and the Dow Jones Industrial Average to surge more than 1,000 points. The president also touted what he described as “productive” peace talks with Iran, providing relief to investors concerned about rising oil prices and their impact on inflation and economic growth. 

The message amounted to a sudden shift from Mr. Trump’s post on Saturday that threatened to “obliterate” Iran’s power plants unless it reopened the Strait of Hormuz to ship traffic. That abrupt change, which caught investors by surprise, has drawn scrutiny over unusual trading activity just before Mr. Trump issued Monday’s market-moving announcement.

“Massive spike”

In the minutes before Mr. Trump’s Monday morning post, there was a spike in oil futures trading, according to Bloomberg News and the Financial Times. Between 6:49 a.m. and 6:50 a.m., about 6,200 Brent and West Texas Intermediate futures contracts changed hands, with a notional value of $580 million, according to the Financial Times’ analysis of Bloomberg data. 

The average trading level for the same time period over the previous five trading days was about 700 contracts, Bloomberg News reported. 

Market experts said the trading volume in crude oil futures on Monday morning was larger than typical for that time of day.

“The massive spike in volume of trades right before that post is certainly enough to raise eyebrows, and I think to launch an investigation into what was behind that,” Stephen Piepgrass, a partner who specializes in futures trading at the law firm Troutman Pepper Locke, told CBS News.

Insider trading — when individuals or firms trade on material information that isn’t publicly available — is illegal because it undermines market integrity and investor confidence, noted Jill Schlesinger, CBS News business analyst and a former options trader on New York’s Commodities Exchange.

“Does it seem fair that someone is trading and making money and profiting on information that you and I don’t have? Yeah, that kind of stinks,” she said.

But Schlesinger said she doesn’t expect government securities regulators to investigate the oil trading, partly because Mr. Trump has previously expressed support for a lighter regulatory environment.

The Commodity Futures Trading Commission, which oversees futures markets, didn’t immediately return a request for comment. The White House also didn’t immediately return a request for comment. 

No clear catalyst

One reason the surge in oil futures trading is arousing suspicion is that no market-moving announcements were slated for Monday morning, such as government economic releases or speeches from Federal Reserve officials. 

The trading “was especially bizarre because there were no major news items — no major publicly available news items — to drive sudden big market transactions,” Nobel Prize-winning economist Paul Krugman wrote in a March 24 blog post. 

He added, “The story would be baffling, except that there’s an obvious explanation: Somebody close to Trump knew what he was about to do, and exploited that inside information to make huge, instant profits.”

Despite those suspicions, it’s unclear whether the trading was initiated by a person or an algorithm of the kind widely used in computerized trading, with the latter typically relying on preset strategies for executing trades, Tim Skirrow, head of energy and derivatives at consulting firm Energy Aspects, told CBS News. 

Skirrow’s data shows that trading at 6:50 a.m. on Monday was six times the typical volume for that time. “In terms of size, this is not exceptionally large — just unusual for this time of day,” he said. 

To be sure, the oil market has been unusually volatile during the past several weeks amid escalating conflict in the Iran war. Brent crude, the international benchmark, is trading at about $100 a barrel, a 37% increase from before the start of the conflict on Feb. 28.

Oil futures trading volume has also been elevated since the outbreak of hostilities. More than 3 million contracts have been traded on several days in March, compared with typical trading of about 700,000 to 1.4 million contracts in the three weeks before Feb. 28, according to data from financial services company CME Group. 

“The volume [on Monday] was a bit more normal than the usual time of the day, but there’s a lot going on in the market,” said Darrell Fletcher, managing director of commodities at Bannockburn Capital Markets.

Uncanny predictions?

Signs of potential manipulation in the oil markets come as concerns mount among lawmakers and regulators over possible insider trading on prediction market platforms, where users can bet on the outcome of political, sports and many other future events. 

In recent months, Polymarket users have placed a series of unusually well-timed bets on the capture of former Venezuelan President Nicolás Maduro and on the Iran war, leading some to question whether people are making trades based on classified information. 

On Monday, The Guardian reported that bets totaling $70,000 made by eight Polymarket users on a U.S.-Iran ceasefire suggest potential insider trading.

As financial market dynamics shift and concerns over potential manipulation mount, the CFTC appears to be taking a more hands-on approach, according to Piepgrass. The agency recently launched a proposed rulemaking process that focuses in part on what actions prediction markets should take to prevent insider trading. 

Piepgrass said the outcome of that process could have implications not just for prediction exchanges, but also for oil markets.

“My sense is the CFTC is undergoing a sea-change right now because of this. They’re seeing more activity than they have seen in decades, maybe since they were created,” he said. “They’re reassessing everything.”

Lawmakers are also scrutinizing prediction markets. Last week, a bipartisan group of senators and House representatives introduced a bill that would prevent traders from betting on government actions, war, and events where an individual knows or can control the outcome. The lawmakers said their goal includes blocking government officials from making bets based on insider information. 

As regulators clamp down, prediction markets Kalshi and Polymarket are moving to tighten their own rules on insider trading, a move some experts describe as an effort to preempt stricter government oversight. Both companies said Monday they have guardrails in place to detect suspicious activity.