In Case You Missed it, (and according to ABC News) the Department of Justice (DOJ) has joined the Commodity Futures Trading Commission (CFTC) in a widening Investigation/inquiry into potential misuse of material non-public information in one of the most liquid and geopolitically sensitive commodity markets on earth…the Oil market.
And this would include participants in the TACO Trades.
Ironically (or NOT) the trades in question involved bets that oil prices would fall shortly before major U.S. or Iranian announcements tied to the Iran war to the tune of $2.6 Billion in oil futures.
Here’s a sampling of trades…
Data sourced from the London Stock Exchange Group (LSEG) – which captures exchange-traded futures flow but strips identities – reveals four distinct clusters of aggressive shorting in WTI and Brent crude futures:
March 23: >$500 million in shorts executed in a one-minute burst roughly 15 minutes before President Trump announced a five-day delay on planned strikes against Iran’s energy infrastructure. Oil prices subsequently plunged ~15%.
April 7: ~$960 million short position placed hours before the temporary ceasefire announcement (oil dropped sharply on the news).
April 17: $760 million short bet executed ~20 minutes before Iranian Foreign Minister Abbas Araghchi declared the Strait of Hormuz open to commercial traffic.
April 21: $430 million additional short layer placed 15 minutes before Trump extended the ceasefire.
Total exposure: >$2.65 billion in directional bets that oil’s geopolitical risk premium was about to collapse. These were institutional-sized clips that moved the tape.
Investigation of TACO Trades…
The CTFC began investigating suspicious oil trades last month, which has now expanded under DOJ scrutiny. But, so far, no names have been named.
And that’s most likely because the Boyz in the “Club” have multiple ways to insulate their trades through multiple entities in the “Dark Market.”
When you consider the trigger words like “imminent strikes” or “Hormuz closure” to “ceasefire” or “shipping lanes open,” it makes many (No Brainer) trades for the Boyz.
What remains to be determined is who were the counterparties to these trades?
Because $2.6 Billion is not chump change.
But history proves how this is a classic example of Wall Street exploiting information to make bank?
The second oldest profession…linked to the first.
Unfortunately, we believe even if the traders are exposed, they’ll be subjected to a slap on the wrist and walk…or “Pardoned.”
The worst-case scenario is that they might also have to pay a multi-million-dollar penalty (AKA, an insider “license fee”) to escape prosecution.
And it will all be quickly swept under the rug with the next Distraction de Jour.
How much does anyone want to bet it involved people in Congress???
Share this with a friend…especially if they think Jared Kushner is one of the traders involved through the $6 Billion Wealth fund he manages for Saudi Arabia. They’ll thank YOU later.
P.S. Before being named US Secretary of Treasury under Trump, Scott Bessent was a hedge fund manager.
Hmmm!
Remember:
We’re Not Just About Finance
But we use finance to give you hope.
“And you shall know the truth, and the truth shall make you free.”
