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The surge in oil futures spurred by the initial missile attacks in the Middle East last week triggered a wave of hedging by producers seeking to lock in the higher prices, keeping some traders up late into the night.
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AEGIS Hedging Solutions LLC, a Woodlands, Texas-based firm that helps about 350 oil producers with hedging, handled the largest volume and greatest number of trades in its history on the night of June 12 after Israel struck nuclear sites across Iran, according to President Matt Marshall. Trades lasted until 11 p.m. that night and resumed at 7 a.m. the following day, he said.
“Quite a day,” Marshall said in an interview.
Most deals involved swap contracts because they are more quickly executed than collar structures involving puts and call spreads, Marshall said. There was an immediate interest in hedging near-term prices, but there also was an uptick in overall activity, he said. Some producers executed orders Thursday night while others set up trades to be executed Friday morning after obtaining approval from their risk and legal departments, he said.
Some of the options trades have shown up in market data. About 700,000 barrels per month of three-way Asian-style WTI options collars for the second half of 2025 traded Friday. Those tend to be used by hedgers as they settle against the average of WTI prices over the month.
Hedging activity was most concentrated for the remainder of 2025, with some reaching into 2026, said Vikas Dwivedi, Macquarie Group global energy strategist.
“This is a gift to oil producers,” Dwivedi said. “Oil producers can say ‘thank you’ by hedging.”
This story was produced with the assistance of Bloomberg Automation.
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