Memphis Barker
Thousands of kilometres from the Strait of Hormuz, Alex scans the numbers that flow across seven rapidly flickering computer monitors.
The clock has just hit 9am at the London headquarters of Onyx, an oil-derivatives trading firm, and the Singapore market is entering its busiest period of the day.
Adrenaline crackles through the room; young men and women tap their feet frantically and bark instructions into their headsets.
“4kt of Japanese propane, June FEI, Mop-J,” bellows Alex to his colleagues, who do not turn around from their own stacked arrays of monitors.
Until last month, Onyx’s 60 international traders were left to carry out their arcane, brain-frying business comfortably out of sight.
But today, they find themselves on an unlikely front line in the war between the United States, Israel and Iran.
As US B-2 bombers and F-35 fighter jets strafe Iran, another battle rages over the price of oil – and the weapon of choice is the “jawbone”.
Presidents are said to “jawbone” when they use the weight of a White House statement to bend markets into line.
John F. Kennedy pressured the steel industry and Lyndon B. Johnson developed the art form against labour unions.
But no president has used the tool so much – nor so gleefully – as Donald Trump.
Whenever certain oil benchmarks threaten to spike – above $US100 ($145) for US-produced West Texas Intermediate (WTI), and a chunk higher for North Sea Brent crude – he releases dovish statements that trigger a collapse.
In response, Iranian hardliners have started to sound like New York finance bros as they attempt to cause panic once more.
“The price of oil has basically become a referendum on the war,” says Javier Blas, a Bloomberg columnist and author.
“[WTI] below 100, the war is going great. Above 100, the war is not going great. And both sides are trying to push the price in the direction they want.”
“That’s extraordinary because we have never seen that in modern warfare.”
According to Blas, the US president has so far won the battle playing out across the most-watched benchmark indices, whose numbers line the front page of the Financial Times and industry news portals.
Like many oil analysts, he believes Brent should be around $US30 higher per barrel, given the unprecedented cut-off of around a fifth of global oil supply.
However, the White House has been “very effective on talking the market down”, he says.
That has allowed the Pentagon to extend the timeframe of its military operation before the “price of oil becomes unbearable from an economic point of view”.
Jawboning works particularly well on the oil market, where traders must peer into the future like sweaty, creatine-pumped fortune-tellers.
“Spot” prices paid for a barrel of oil in the Gulf do not guide the benchmark indices. Rather, they reflect “futures” contracts, estimates of the price that barrel will fetch after a tanker completes its month-long journey west.
A lot can happen in that time. Before the war, traders might guide themselves by predictable variables, such as inventory data or seasonal demand.
But since February 28, they have faced high levels of volatility. Either the Strait will remain closed in a month’s time – and oil will become like treasure – or some agreement will be reached to start the usual flows again.
Enter Trump, the man on whose shoulders that decision largely rests.
To date, the president’s “TACO” – or Trump Always Chickens Out – reputation has played to his advantage. Few traders believe he will prosecute a lengthy war that pitches oil towards $US200 a barrel.
Some doomers have already lost their shirts. On March 9, the second Monday of the war, the oil market whipsawed through the wildest day in its history.
Panic had begun to rise over the weekend. On Truth Social, Trump repeatedly posted that a spike in energy prices was a “very small price to pay” to eliminate Iran’s nuclear threat.
Inside the Onyx offices, traders slept in sleeping bags laid out in a boardroom. When the markets opened on Monday, Brent surged to $US119. Mannie Newman, Onyx’s chief Brent trader, barely remembers the chaos.
Then came the first big jawbone.
At 2.16pm Eastern Time (in the US), Trump told CBS News that the war was “very complete”. Prices fell sharply, falling back to $US87 in the largest-ever intraday swing – a significant price movement that occurs within a single trading day.
“Tourists” and hedge-fund speculators were brutalised, says Greg Newman, the chief executive and co-founder of Onyx. In other firms, entire teams of traders were sacked.
Now Onyx’s whizz-kids keep an unblinking eye on the president’s Truth Social account. Sometimes the oil price shifts before he posts, indicating insider trading.
On March 23, unknown traders placed $US580 million worth of bets on a decline in the oil price. Around 15 minutes later, Trump announced a pause on his threat to strike Iranian oil infrastructure – and held out hope for fresh talks.
Expertise helps Onyx to weather the storms. “When Chris Wright, the Energy Secretary, said that the US Navy was escorting tankers through the Strait of Hormuz, we spoke to ship-owners in the strait, who said, ‘well, we just saw a ship get bombed’.”
Another edge comes from a deep understanding of Iran’s position – in particular, its unwillingness to lift the stranglehold on the strait.
“We always felt that the Iranians were serious,” says Newman, a calm, fresh-faced executive who nevertheless says, at the age of 36, he is too old to trade on the floor (it’s like being a “professional footballer”, he jokes).
The Iranian regime has often delivered kinetic replies to Trump’s jawboning, striking the exact targets needed to influence worldwide prices.
On March 14, an Iranian drone hit Fujairah in the United Arab Emirates. That site sets the benchmark price for the Dubai index, which sits higher than Brent and WTI around $US130.
“The Iranians have played a blinder,” Newman reflects. “They know that one bomb there goes a lot further than another somewhere else.”
The regime has engaged in jawboning, too.
In recent weeks, Mohammad Bagher Ghalibaf, the former Islamic Revolutionary Guard Corps commander in charge of negotiations with Washington, has come across like a smart-mouthed Wall Street analyst.
“Heads up,” Ghalibaf wrote on Monday morning. “Pre-market so-called ‘news’ or ‘Truth’ is often just a set-up for profit-taking.”
Traders should beware of any attempt by Trump to bring the markets down, he said, referring to the president’s routine Monday morning statement on Truth Social.
“Do the opposite: If they pump it, short it,” Ghalibaf added. “If they dump it, go long.”
Iran’s repeated public denials of negotiations over a ceasefire probably also form part of a “reverse jawbone”. The longer the war looks like it will last, the higher the price of oil – and the more leverage for Tehran.
Out on the trading floor, the Onyx team has a slight lull before focus turns to the Brent market, whose busiest hours are later in the UK afternoon. Vitamin pots and packets of beef jerky litter one desk.
About 3000 people apply for each position here. PhD students and other academic types are tested for their ability to perform a dull, complex task – finding the numbers one to 100 in a puzzle, then 100 down to one again – while juggling other demands.
Some firms now use algorithms to assess the “sentiment” in Trump’s posts and take immediate positions in the market. But these can go wrong, says James Todd, the 28-year-old head of the trading floor.
On Monday, Trump posted on Truth Social about negotiations with a new “REASONABLE” Iranian regime, before threatening to obliterate the country’s energy infrastructure and withdraw from the war without a deal to reopen the Strait of Hormuz
Brent at first went down, says Todd. “I presume an algorithm had detected dovish sentiment.” But then a minute later it “went all the way back up”. Perhaps the algorithm had corrected itself, or a trader finished reading the whole post.
Onyx does not take grand, long-term positions based on its own view of the oil market. Instead, traders surf the waves as they go up and down.
Traders must exercise caution, says Todd, because “you’re only a Trump tweet from being wiped out”.
But the team sees no end to the crisis in the near future.
As we speak, the last tankers that crossed the Strait of Hormuz before the outbreak of war were due to dock in Europe. After that, the economic explosion will hit – and last as long as the strait remains closed.
“It’s amazing how naive the European and US governments have been,” says Newman. “This is the worst oil crisis we’ve ever seen.”
On the weekend, he made sure to fill up his car; the cost, he reckons, could rise 3 pence (6¢) a litre every day in the coming weeks.
“If I was more price sensitive, I’d be out filling up jerrycans,” says the chief executive, who sits in a boardroom overlooking traffic on Gloucester Road. But Britain, whose economy relies in particular on imported diesel, will soon see “much higher prices” on a wide array of goods.
Trump has not lost the ability to jawbone the market, even though the effect is diminishing.
On Wednesday morning, the Brent price was trading below $US100, from a high of $US118 the day before. That partly reflects the rollover of contracts from May to June. But it also suggests a belief in Trump’s latest claims that the war will be over in “two to three weeks”.
Then came another bout of jawboning. Iran had asked for a “ceasefire”, Trump posted on Truth Social. “Out of context quotes,” Ghalibaf replied, before deploying another piece of trader slang: “Do your own research.”
America has used some of the most advanced weapons the world has ever seen in its war with Iran. But the conflict may be remembered for one whose name is drawn from the biblical story of Samson, who used a donkey’s jawbone to slay the Philistines.
Will Trump go down in history as the victor or the vanquished? The markets remain open on that question.
