Investors, US crude producers scramble to lock in oil price spike

• Record volume of energy futures and options traded on ICE
• US diesel futures outperform crude and gasoline amid Middle East conflict
• US producers scramble to lock in high prices

HOUSTON, March 3 (Reuters) - Investors rushed to lock in a spike in oil prices this week, resulting in a record volume of energy futures and options contracts changing hands on Monday, the first trading day after Israel and the U.S. bombed Iran and Tehran retaliated.

Hedging provides traders with opportunities to profit in times of volatility, and can help producers reduce risk and protect their production from sharp moves in the market by locking in a price for their oil.

Investors traded a record 12.7 million energy futures and options contracts on the Intercontinental Exchange on Monday as oil futures jumped, ICE said on Tuesday. Crude oil futures traded at multi-month highs during the session.

ICE Low Sulphur Gasoil, the global benchmark for refined oil products, saw a record 1.3 million futures and options contracts traded, beating the previous record set on June 13, 2025, when Israel and Iran also traded air strikes.

U.S. diesel futures HOc1 settled nearly 12% higher on Monday, outperforming both U.S. crude CLc1 and gasoline futures RBc1, which settled over 6% and nearly 4% higher, respectively.

Diesel prices are the most susceptible to the worsening conflict in the Middle East because the region is a major supplier of the fuel, and because diesel inventories have dropped sharply after high demand for heating and power generation during a harsh winter, analysts and traders said.

Around 4.8 million Brent futures and options contracts traded on March 1 on the ICE, the highest since June 2025.

U.S. PRODUCERS LOCK IN HIGH PRICES

U.S. oil producers scrambled at Monday's market open to coordinate with banks and large trading houses to lock in soaring crude prices, with all eyes on the Strait of Hormuz, a critical shipping lane through which around 20% of global oil supplies flow.

West Texas Intermediate crude futures CLc1 climbed 8% at Monday's market open, and Brent crude futures LCOc1 jumped 11%.

"We had a queue of oil producers and also a set of dealers ready to trade at 5 p.m. on Sunday, anticipating a price increase. It was standby, everybody's ready, finger on the button, let's get going," said Matt Marshall, president of Aegis Hedging, which handles hedging for roughly 25-30% of U.S. output, according to internal estimates.

The U.S. produces 13.73 million barrels per day of crude, according to the latest government data.

"Even though it was a Sunday, I would estimate about a quarter of our oil-producing customers were watching at the open and had coordinated with us and counterparties to be able to hedge," Marshall said.

A lot of producers on the Aegis hedging platform opted for swaps, which offer the ability to convert a sudden price increase into a fixed price based on crude futures prices.

On Sunday, some analysts predicted oil would open above $90 a barrel or even close to $100, but Brent opened at around $81.60 and WTI at $75.

"I think we will see (U.S. producers) looking for more opportunities to hedge if there's news that the Strait could stay impassable for longer, this is primarily about the Strait," Marshall said.