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As reported by Reuters, energies traders are piling into high-priced oil bets on expectations that US sanctions on Iran will impede global supply far more than most oil producers are letting on.

Key highlights

While its true that US oil supplies continue to build up, and OPEC sitting confidently that they’ll be able to absorb whatever supply glut gets left behind after the US re-imposes stiff economic penalties on Iran beginning November 4th, oil traders are betting in the opposite direction as the US struggles to get its crude barrels into the global marketplace and large buyers of Iranian oil look set to follow along with the US’ plan to embargo Iran.

$100 strike bets on both WTI and Brent crude are continuing to rise, with bets that WTI futures will hit $100/barrel before the end of 2019 hitting record numbers as the US looks sorely unprepared to absorb crude demand from Iran’s sanctioned shortfall, with Asian refineries unable to use American crude products in machinery and processes that have been purpose-built for Middle East crude grades.

The bullishness is visible in the U.S. options market. The number of open positions on $100 December 2019 WTI call options CL1000L9 – bets on futures hitting that price by the end of 2019 – has risen by 30 percent in the last week to a record 31,000 lots, according to CME data. – Reuters