OPEC+ meeting date shift disrupts oil options, impacting millions of barrels

Alex Longley and Devika Krishna Kumar, Bloomberg November 22, 2023

(Bloomberg) — The decision by OPEC+ to move its meeting from the weekend to next week is likely to affect millions of barrels worth of oil options and potentially send prices swinging more widely.

Brent crude options for January expire on Monday, Nov. 27. If the meeting had taken place on Nov. 26 as initially scheduled, that would have allowed traders to use those contracts to profit from any decisions — whether bullish or bearish — taken at the gathering. Now with the meeting scheduled for the Nov. 30, anyone looking for exposure to the producer group’s next moves will have to use a different month of options contracts. 

In total there are about 646 million barrels worth of January Brent options outstanding, though only a fraction of that amount would be close to current price levels and therefore at risk of seeing significant shifts in values. There’s also almost 11,000 expiring US diesel contracts and a few hundred gasoline ones too. 

Options are one of the most popular ways for oil traders to hedge the risk of unexpected moves in prices because they offer a cheaper and sometimes less risky alternative to futures.  

The shift could add further volatility to prices, as traders shift positions from one month to the next, in part disrupting the same speculators OPEC leader Saudi Arabia has bemoaned for pushing prices lower. Four of the five most-active Brent options Wednesday were February contracts.

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