Could the U.S. election complicate the situation in the Middle East? Traders worry that oil prices will break through $100.

Fearing that tensions in the Middle East will escalate in the days following the U.S. election, causing oil prices to surge to $100 per barrel, oil traders are scrambling to buy U.S. crude futures call positions.

Data compiled by foreign media shows that more than 10 million barrels of U.S. crude oil December call options changed hands in the popular $90/$100 spread trade late Monday. These contracts will expire on November 15, providing traders with a relatively cheap way (compared to futures contracts) to hedge against a price surge in the coming days.

Surge in demand for crude oil call options

As the fourth quarter of this year begins, the oil options market is experiencing the largest volatility in years. What the ongoing tensions in the major oil-producing regions of the Middle East mean from the U.S. election on November 5 to the presidential inauguration in January remains uncertain. According to reports by The Wall Street Journal this week, Iran is planning a complex retaliation against Israel, involving more powerful warheads and other weapons.

Last month, interest in trading call options across the oil market surged, with open interest in call options reaching a new high. Although some bullish sentiment has waned following Israel's limited attack on Iran last week, the premium of call options relative to put options remains close to the highest level since the outbreak of the Russia-Ukraine conflict in 2022.

This week, international crude oil has risen for two consecutive trading days. Bob Yawger, head of energy futures at Mizuho, stated in a report, 'Crude oil prices are rising due to favorable factors such as supply and demand dynamics, geopolitical issues, election fervor, and weather.'

In the U.S., the outcome of the presidential election between Trump and Harris remains uncertain. PVM analyst Tamas Varga stated, '(The election) results may take days or even weeks to be announced, and are likely to be challenged.'

Meanwhile, energy companies in the Gulf of Mexico began evacuating workers from offshore platforms ahead of Tropical Storm 'Rafael.' 'Rafael' is expected to strengthen into a hurricane this week. Analysts say the storm could reduce oil output by about 4 million barrels.

Article reposted from: Jinshi Data