Manny Newman powered up the 10 screens on her desk in London’s South Kensington late on Sunday night, bracing for what would become the most volatile trading session the oil market has ever seen.
Over the next 23 hours, the benchmark Brent crude price surged to as high as $119 a barrel before plunging to $84, the biggest intraday swing in dollar terms on record.
Newman, 32, is a market maker at Onyx Commodities, a trading firm that continuously quotes prices to buyers and sellers in oil markets. Even for an experienced trader, Monday’s chaos was unlike anything she had experienced.
“I’ve been through a lot of crises, including Covid, Russia and the Saudi oil attacks in 2019,” she said. “They were nothing like yesterday.” The pace of trading, she added, felt like playing a video game “for 24 hours straight”.
Onyx’s traders were living off electrolyte drinks, creatine powder, nicotine patches and power naps. “We turned our boardroom into a motel. We’ve got sleeping bags in there,” she said. “Last night I fell asleep to Trump’s speech, woke at 3am to check the market, and then was up at 5.30am.”
The stakes have rarely been higher. Onyx, which employs 60 traders in London, Dubai and Singapore, quotes prices on thousands of contracts covering crude oil and refined products such as diesel and jet fuel, most of which are linked to the benchmark oil price.
On Monday, the scale of the price movements made that task extraordinarily challenging.
Oil markets, which are closed over the weekend, initially surged as the conflict in the Gulf escalated, after the FT reported on Sunday that Saudi Arabia and the UAE had become the latest exporters to cut production. They fell back sharply first on news that governments were considering a release of emergency oil stockpiles and then on President Donald Trump declaring the war “very complete”.
“We were seeing the biggest moves you can imagine, so imagine you then have to determine a price,” said Greg Newman, Manny’s partner and Onyx’s co-founder and chief executive.
The difference between buying and selling prices, known as the spread, which is normally a few cents a barrel, widened dramatically to as much as $10, “because there was just no way to know where things were”, he said.
“We are one of the biggest volume traders in oil. If you make a mistake on the price normally it might be a $10,000 mistake, but yesterday it would be like a $2mn mistake,” Newman said.
At times, the challenge overwhelmed traders. “A couple of our guys said they just needed to stop for a bit, the moves were so big it was hard to get a sense of it,” he said. “When the price moves so aggressively, there are so many ramifications and it happens so quickly it is very hard to manage your emotion.”
Newman said he had also spent the weekend evacuating 15 traders and their families and pets from Dubai, chartering an Airbus jet from Marseille to pick up his team in Fujairah, stopping in Rome to refuel, and then returning to London. The traders arrived in time to go to work for the market open.
Much of Onyx’s business involves helping oil producers, refiners and trading companies hedge their exposure to price swings. Companies use these trades to lock in prices for oil they will produce or consume in the future.
“People are trying to lock in prices over time and in different regions,” Newman said. “Refineries might want to secure the margin between the crude they buy and the fuel products they sell.”
Huge price spikes provide a great opportunity for oil producers, who can buy up contracts on their future output. “If the oil price goes up 20 per cent, that is a huge economic shift for someone. Producers just made 20 per cent more on a barrel they might not have produced yet.”
But on Monday the normal balance between buyers and sellers at times broke down. As prices surged, buyers rushed in to secure supplies at higher prices. Yet few traders were willing to take the other side because of the uncertainty.
The market then lurched the other way as speculative traders unwound positions.
Newman said financial speculators play a far larger role in oil trading than they once did. “Today, we do not know who is behind some of the financial trades and what information they have. They might come in very aggressively, and you ask, ‘Do they know something you don’t?’”
He added: “Before you know it, the market’s lost control of the narrative and everyone has to exit because they cannot handle the price swings.”
Manny Newman, who heads trading in Brent crude, said she had heard a couple of funds had fired entire teams after racking up heavy losses in Monday’s volatility. “I heard a couple of trading houses were also short across the board and did not have a good time,” she added, saying that short squeezes can be “devastating if you are on the wrong side, like billions of dollars”.
In one example she witnessed, a trade designed to hedge future Brent deliveries swung dramatically within hours. “It was done at $8 in the morning, and by the end of the day it was $4.50,” she said. “That’s easily a $25mn loss in 10 hours. It’s pretty scary stuff.”
Amid the chaos, people began to pull back from the market, reducing the size of their trades as uncertainty grew. “Volumes dropped sharply,” she said. “There were a lot of breakdowns happening in the market.”
Despite Trump’s claim that the war will end “very soon”, she does not expect to get much sleep in the weeks ahead. “This disruption is going to take at least six weeks to two months to resolve, even if it all stops today,” she predicted. “I expect we will be in a high-priced environment for probably about two to three months.”