Misleading Iran report triggers flash crash as Brent tumbles $1.50/b
London (Quantum Commodity Intelligence) – Brent crude oil futures briefly nosedived in late-afternoon London trading Thursday on erroneous rumors that the US had lifted sanctions on Iran, but prices rebounded as US officials cleared up the confusion.
Brent futures for front-month August were trading at approximately $72.50/barrel (1610 GMT), but slumped by over $1.50/b in the space of a few minutes on rumors that the US was set to lift oil sanctions on Iran.
Brent futures quickly rebounded to $72.40/b.
The US WTI benchmark also dropped by a similar level before recovering.
The source of the rumor appears to have been channelled via social media sites, with potentially misleading wording behind the price crash.
A tweet announcing, "U.S. LIFTS SANCTIONS ON IRAN OIL OFFICIALS" was widely shared among trading community groups on social media.
While technically correct in that sanctions have been lifted on at least one Iranian oil official, the wording may have helped trigger the flash crash.
The US Treasury later clarified the move as routine, and not linked to any potential nuclear deal.
A trading source familiar with algorithmic technology said the wording of the headline was likely to have triggered automated selling, which in turn would have triggered a further wave of 'stop-loss' sell orders.
The Twitter headline was said to have been taken from a wire service, but had been subsequently corrected to make clear the sanction lifting regarded an individual, not oil.
Iran talks
But the volatility highlights market sensitivities over talks between Iran and the international community, with round six set to go ahead in Vienna this weekend.
Iran remains upbeat on reaching an agreement, saying Wednesday it was preparing for a speedy return to pre-sanctions production levels.
US diplomats, however, have repeatedly said a deal is some way off.
Regarding the lifting of sanctions against the Iranian official Thursday, one Middle East analyst told Quantum, "a goodwill gesture before they breakup, and resume (talks) after the elections."
"I'd put chances of a deal and immediate return of Iranian barrels at 10%. So much needs to be worked out."
