By Admin 
Crude Oil: The Strait of Hormuz has been closed amid the war in Iran and increasing tension in the Middle East. Due to this, there is an atmosphere of uncertainty regarding the supply of oil in the global market. Options market data shows that traders are placing big bets on the possibility of Brent crude price reaching $150 per barrel by the end of April.
Prices have been rising continuously since February
Currently the price of Brent crude is around $107 per barrel. There has been an increase of about 50 percent since February 28. From this day, America and Israel had declared war against Iran. Due to this, there has been a major impact on the transportation of oil through the Strait of Hormuz. Despite indications that Iran and America are trying to find some way to end this conflict, price fluctuations have continued.
Shocking revelation in options trade data
Options trading in the derivatives market shows bets placed on oil prices reaching at least $150 a barrel by the end of April have increased tenfold over the past few weeks as traders brace for near-term volatility. This will also surpass the all-time high record of $ 147 per barrel set by Brent in 2008. At that time, due to the huge surge in demand for oil, there was a lot of pressure on the supply capacity.
ICE data shows that the share of those contracts – which expire at the end of April and give the holder the option to buy June Brent futures at a price of $150 (known as ‘call options’) – is almost 10 times higher than a month earlier.
Some important points of option trading
- Due to the closure of the Strait of Hormuz, about 20 percent of the crude oil supplied daily in the world is stuck in the Gulf countries.
- In view of the supply shock, Brent crude is expected to reach $ 150 per barrel by the end of April. For this, open interest in ‘call options’ has increased almost 10 times compared to last month to 28941 lots.
- If the price of oil actually reaches $150 per barrel, it will surpass the all-time high of $147.50 per barrel in 2008.
- The situation is that some traders are buying options at $160, $200 and even $300 per barrel for June. This shows how much fear is ingrained in the minds of investors.
- BlackRock CEO Larry Fink has warned that if oil prices remain near $150 per barrel for a long time, it could cause a global recession.
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