(OPINION) Traders piled into options that oil could surge even further after rising to the highest since 2008, with some even placing low-cost bets that futures surpass $200 before the end of March.
Prices to buy call options at higher prices surged Monday as the market assessed the possibility of a supply cut-off from Russia, one of the world’s biggest exporters. More than 1,200 contracts for the option to buy May Brent futures at $200 a barrel traded on Monday, according to ICE Futures Europe data.
The options expire on March 28, three days before the contract settles. The price to buy them jumped 152% to $2.39 a barrel. A $150-a-barrel call option for the June Brent contract doubled from Friday, according to ICE, while the cost of $180 call options jumped 110%.
The front-month May contract for Brent surged dramatically early on Monday as traders panicked over talks of a Russian crude ban amid Libyan supply disruptions and delays to expected progress in Iranian nuclear talks.
JPMorgan Chase & Co said last week that Brent crude could end the year at $185 a barrel should Russian supplies continue to be disrupted, while Australia & New Zealand Banking Group Ltd. saw around 5 million barrels a day of pipeline and seaborne oil supplies being impacted by new sanctions.
