Brent futures, options volumes surpass pandemic record as oil market reels

HOUSTON (Reuters) - Brent crude futures and options contracts traded on the Intercontinental Exchange (ICE) hit record volumes on Friday, surpassing levels seen during the COVID-19 pandemic as investors braced for a global trade war and OPEC+ oil output hikes.

Heavy selling drove oil prices to four-year lows at the end of last week, marking the largest weekly decline in a year and a half.

Market participants traded 4.067 million ICE Brent futures and options contracts, surpassing the previous daily record set in 2020, according to ICE, when the global pandemic shocked energy markets and sent traders scrambling as oil demand shrank.

U.S. President Donald Trump stunned financial markets on Wednesday by imposing sweeping tariffs on most U.S. imports, with some countries, including China, facing significantly higher levies.

The oil market reeled further after the Organization of the Petroleum Exporting Countries and allies (OPEC+) decided to advance plans for output increases. The group now aims to return 411,000 barrels per day to the market in May, up from the previously planned 135,000 bpd.

Futures continued their fall on Monday, with Brent trading as low as $62.52 a barrel during the session, as Trump threatened even higher tariffs on China and major banks raised their recession risk forecasts. [O/R]

Benchmark Brent is a price barometer for three quarters of the world's internationally traded crude oil, according to the ICE, making it a bellwether for the health of the oil market.

"People were waiting on the sidelines to take a position in the market and then once they started to see some of these tariffs unfold, along with the OPEC news, they started to take a bearish position," said Alex Hodes, director of market strategy at financial services firm, StoneX.

OIL INVESTOR WHIPLASH

In the days before Trump announced reciprocal tariffs, the oil market had been focused on demand growth, low oil inventories and the risk of sanctions on Russia, Iran and Venezuela disrupting supply, said UBS analyst Giovanni Staunovo.

Trump threatened on March 30 to impose secondary tariffs of 25% to 50% on buyers of Russian oil if he felt Moscow was blocking his efforts to end the war in Ukraine.

In the week to April 1, money managers had raised their net-long Brent crude futures and options positions on ICE to their highest since April 30, 2024, according to data from LSEG.

Brent futures had closed at a one-month high on March 31, at $74.74 a barrel, helping buoy bullish sentiment.

"Now the focus has switched to how much will the global economy weaken down as a result of the trade war and how much will oil demand growth slow down over the coming months," Staunovo said.

StoneX's Hodes said he expected this week's commitment of traders data to be much more bearish.

(Reporting by Georgina McCartney in Houston; Editing by Nia Williams)