If you enjoy the content at iBankCoin, please follow us on TwitterThe prospect of oil topping $150 a barrel within a year has become the biggest bet in the options market as the U.S. and Europe work to limit Iran’s crude sales.
The number of outstanding calls to buy oil at $150 next December has jumped 29 percent since a Nov. 8 United Nations inspectors’ report on the Persian Gulf country’s nuclear program, to more than any other option on the New York Mercantile Exchange. The contracts equate to about 38 million barrels of oil, or 43 percent of daily global demand, based on data from the U.S. Energy Department.
“People are taking a long shot and buying cheap insurance,” Fred Rigolini, vice president of Paramount Options Inc. in New York, who has traded crude options for 23 years, said in a telephone interview on Dec. 5. “They’ll probably play this through the spring.”
The price of the $150 calls has risen 9.2 percent to $1.30 since the day before the UN report was published, outpacing the 5.2 percent gain in oil futures. Crude will surpass $250 a barrel if nations threaten to ban purchases from Iran, the Tehran-based Shargh newspaper cited Ramin Mehmanparast, an Iranian foreign ministry spokesman, as saying Dec. 4. Iran is OPEC’s second-biggest producer.
Open interest, the number of contracts not closed or delivered, in options to buy crude at $150 next December increased 11 percent on Nov. 22 alone as the U.S., U.K. and Canada imposed new sanctions on Iran’s financial system, including measures that may make it more difficult for buyers to pay for Iranian crude.
Joined Nov 11, 2007
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the reason why these regimes make threats is, that they are scared of being broke as soon as Euro money dries up.
the European union has been funding Iran and its buddies and now oil is their only revenue left.
if oil prices drop, they wont be able to afford more nukes, rockets or suicide vests to blow up Jewish school children.
which is exactly why oil prices will drop after the GOP wins the race.
they will destroy these regimes just by drilling and keeping oil prices low.