Oil market liquidity has fallen sharply amid the US-Iran war, with Brent crude
open interest dropping to its lowest level since August as traders withdraw from
highly volatile conditions linked to the Strait of Hormuz blockade. The
prolonged disruption has cut off large volumes of Persian Gulf oil, intensifying
price swings, including a 12% Brent drop after shifting peace expectations. Aldo
Spanjer of BNP Paribas said the market has become “close to untradeable” due to
repeated stop-loss triggers and unpredictable headlines. Market participants are
increasingly limited to hedging, algorithmic trading, and reduced-risk
positioning, according to Rebecca Babin of CIBC Private Wealth Group and Scott
Shelton of TP ICAP.
