After a US–Iran peace agreement sent crude futures sharply lower, previously dormant OTC option positions betting on an oil supply glut have resurfaced. Before a US strike on Iran, some traders had positioned for contango (near-month below forward months); the subsequent conflict flipped the curve into strong backwardation — in late April WTI August traded >$5/bbl above September and September ~ $4/bbl above October. That move left more than 20,000 cash-settled put contracts (≈20 mln bbl/month)

After a US–Iran peace agreement sent crude futures sharply lower, previously dormant OTC option positions betting on an oil supply glut have resurfaced. Before a US strike on Iran, some traders had positioned for contango (near-month below forward months); the subsequent conflict flipped the curve into strong backwardation — in late April WTI August traded >$5/bbl above September and September ~ $4/bbl above October. That move left more than 20,000 cash-settled put contracts (≈20 mln bbl/month) nearly worthless. With inter-month spreads now narrowed to under $1/bbl and prices back near pre-conflict levels, those puts have regained reference value. CFTC weekly data show hedge funds and other large specs cut net-long Brent to a six-month low, down roughly 75% since end-March, indicating materially more bearish directional positioning.