A trader couldn’t hope for better timing.
Moments before President Trump postponed strikes on Tehran’s energy infrastructure in a morning social-media post on March 23, a spasm of trades hit the market during off-hours. More than $800 million worth of U.S. and international oil futures changed hands in a matter of minutes, according to LSEG data.
The traders on the right side of those well-timed bets profited when U.S. oil prices fell as much as 13% in the wake of Trump’s change of heart. At least five firms posted gains of $5 million or more on crude futures they bought and sold that day, as measured by average prices adjusted for volume, according to trading records viewed by The Wall Street Journal.
The Commodity Futures Trading Commission is now scrutinizing the surge in trading volumes. The regulator, which supervises futures markets, is trying to gauge whether an insider with prior knowledge of Trump’s March 23 post traded on that information or leaked it to someone who could do so, according to people familiar with the matter.
The CFTC is interested in at least three firms as part of its inquiry, according to documents viewed by the Journal and one of the people. The London-based investment firm Qube Research & Technologies earned about $5 million of adjusted gains on those trades, the documents show, while Forza Fund Ltd. netted roughly $10 million. Totsa, the trading arm of the French oil company TotalEnergies, posted a roughly $200,000 profit.
The firms haven’t been accused of wrongdoing, and it couldn’t be determined why the CFTC is interested in them. Investigators are wading into an arcane and secretive corner of markets where algorithms often dominate; the motivation for any given trade might be hard to deduce; and the line between luck and skill can be thin.
Some of the firms approached by the CFTC attributed their trading decisions to a headline that appeared about 15 minutes before Trump’s Truth Social Post, according to people familiar with the investigation. The headline—“White House eyes Iran war exit even as attacks perist” (sic)—and an accompanying 111-word article by the news outlet Semafor published at 6:50 a.m.
The CFTC’s investigation is continuing, the people said.
Qube’s “investment decisions are model-driven, taking into account a large variety of data sources on a continuous basis, not a directional trade driven by a specific geopolitical comment/update/outcome,” Qube Chief Operating Officer Stuart Brown wrote in an email. He declined to comment on any regulatory investigations.
TotalEnergies said in an email that it is “not aware of any CFTC investigation into Totsa’s crude-oil trading activities. Totsa is firmly committed to complying with all applicable market regulations, enforces a strict market compliance program and has a zero-tolerance policy towards any wrongdoing.” A representative for Metabit Trading, a Chinese firm linked to Forza Fund Ltd., said it hadn’t been contacted by the CFTC.
The March 23 episode isn’t a one-off. The CFTC is looking into several other instances of suspicious trading regarding Iran-related announcements in April and May, the people familiar with the matter said. On May 6, in one of those surges in volume, roughly $700 million of crude futures changed hands about an hour before a report on talks to end the Iran war, according to Dow Jones Market Data.
The well-timed bets have confounded a market in which the price of oil has become a strategic pressure point for both the U.S. and Iran. Tehran’s effective closure of the Strait of Hormuz has throttled more than 10% of daily supplies from a global economy that hoovers up more than 100 million barrels of oil a day.
In the financial market, where various traders exchange contracts typically representing future deliveries of 1,000 barrels of crude apiece, daily volumes are many times greater. But the March 23 episode caught investors’ attention because early-morning activity exploded from hundreds of futures traded a minute to several thousand before Trump’s post.
The documents viewed by the Journal show the firms that propelled that surge in volumes vary widely in approach. Some rely on automated strategies that largely react to second-by-second signals from numerous data sources. Other firms enter at least some of their trades manually.
While the quantitative firm Jane Street gained about $19 million on oil-futures bought and sold that day in adjusted terms, the documents show, the high-frequency firm Jump Trading lost about $15 million. Virtu Financial netted about $3 million, while oil traders at the energy company Shell and IMC Chicago posted seven-figure gains.
Smaller firms also scored big on oil futures that day, the documents show. U.K.-based Paragon Trading Partners netted roughly $3 million in adjusted terms, while traders at the London firm TTG Capital gained about $1 million. The quantitative-focused Tower Research Capital earned more than $3 million.
Those figures might not fully capture the daily performance of firms that simultaneously trade related assets, such as exchange-traded funds linked to oil, or bet on how the price difference between various futures will change over time.
Some of the firms act as market makers, buying and selling huge volumes of financial instruments and taking a profit in the process. Regulators often engage such firms to understand trade flows and help identify other participants, such as hedge funds, that make directional bets on whether prices will rise or fall.
Identifying the firms involved in unusual patterns of trading is often the first step for investigators looking into any suspicious activity. As part of the process, the CFTC will often request additional information from the exchanges where the trades took place or the firms involved in placing the trades, including looking at the individual traders or desks that placed them.
But discerning whether a trade was done on the basis of nonpublic information is challenging, especially if a big trading shop is involved. With just market data, the CFTC is limited to assessing how unusual the trading activity is based on a firm’s past activity. Red flags that might be indicative of insider trading could include the aggressiveness of the trading, and the extent to which it cuts against the firm’s strategy more broadly.
For some insider-trading investigations, the CFTC looks to federal prosecutors at the Justice Department, which can wield the threat of criminal liability to pressure witnesses or targets of an investigation to talk.
As mysterious trades have piled up across markets during the war, Democrats have alleged that people connected to the administration could be profiting. Government ethics guidelines prohibit employees from using nonpublic information for financial benefit, said White House spokesman Davis Ingle.
“However, any implication that administration officials are engaged in such activity without evidence is baseless and irresponsible reporting,” he said.
The White House warned staff on March 24 against improperly leveraging their positions to place well-timed bets in futures markets, the Journal reported. Last month federal authorities charged a U.S. Army soldier who took part in the operation to capture Venezuelan leader Nicolás Maduro with using classified information to reap more than $400,000 from bets on the prediction platform Polymarket.
In an April congressional hearing, CFTC Chairman Michael Selig declined to speculate on if or how information about Trump’s March 23 post might have leaked outside the White House.
“We have a zero-tolerance policy when it comes to fraud, abusive trading practices and manipulation, and anyone who engages in that behavior will face the full force of the law,” he said.
Write to David Uberti at david.uberti@wsj.com, Joe Palazzolo at Joe.Palazzolo@wsj.com and Dylan Tokar at dylan.tokar@wsj.com