Traders have established a record volume of bearish positions against oil, with Brent put options reaching 764,000 contracts on Tuesday. According to ICE Futures Europe data, these contracts pay out if prices drop below specific levels, with significant interest focused on a target of $70 by December.
Narrow spreads accounted for over half of the trading volume, suggesting that many participants are hedging existing portfolios rather than purely betting on a decline. The market activity follows a period of volatility where Brent crude prices fell more than 10% over eight days, dropping from approximately $106 on September 14 to below $98.
The decline in oil prices is linked to recent geopolitical and infrastructure developments. U.S. envoys held discussions with Iranian officials regarding the potential reopening of the Strait of Hormuz, while Saudi Aramco resumed operations on its East-West pipeline following a drone strike on September 13.
Despite the record volume of put options, market analysts note that the pipeline is currently operating at a reduced capacity, and a full restoration of 4 million barrels per day may take several weeks. No formal agreement between the U.S. and Iran has been finalized, and Brent spot prices recently stabilized near $96.64.
