Economist and Nobel laureate Paul Krugman has put forward a serious theory regarding unusual activity in the oil markets surrounding recent tensions with Iran. The focus is on large-scale trading that occurred immediately before President Donald Trump reversed a major policy threat.

Trump's Iran Ultimatum and Market Volatility

Last week, President Trump issued a stark warning, threatening to “obliterate” Iranian power plants unless the Strait of Hormuz was reopened within 48 hours. However, just before this deadline expired, the President backed away from the ultimatum.

Crucially, moments before Trump’s reversal, oil markets experienced an enormous surge in trading activity. Krugman suggests this massive spike strongly implies that sensitive, closely guarded national security information was leaked and used for financial gain.

The Parallel to Treason

Krugman argued that if a spy provided adversaries with such information, the act would undoubtedly be labeled treason. He questioned why the same serious language should not be applied when national security intelligence appears to be leveraged for profit.

This is not an isolated incident, according to Krugman. He noted that similar suspicious trading patterns were observed a year prior when the President introduced and then rescinded “Liberation Day” tariffs, raising questions about whether policy shifts were engineered for allies to “buy the dips.”

How Insider Trading on Oil Futures Works

During an interview with host Mary Harris, Krugman explained the mechanics of profiting from such market timing. The process involves exploiting the price difference immediately before and after a major announcement.

For example, a trader could sell oil futures at a high price, say $98 a barrel, shortly before the announcement. After the announcement causes the price to drop—for instance, to $90 a barrel—they buy back the futures they borrowed, netting a significant profit on the arbitrage.

Krugman estimated that if there was a 10 percent price movement on $580 million in transaction volume, someone stood to collect 10 percent of that volume. He stressed that while he had not run the exact figures, the potential gains are substantial.

The Challenge of Tracing Traders

When asked how the identities of these traders could be uncovered, Krugman acknowledged that while orders might be anonymized, a clear trail likely exists. He believes that a proper investigation, utilizing subpoena power to compel financial institutions to reveal broker information, would expose the responsible parties.

However, Krugman noted that such investigations are typically not pursued, and the trail could potentially grow cold over time. Traders are likely operating under the assumption that they will never be held accountable, perhaps believing they will be protected by political influence.

Krugman's Case: Beyond Standard Insider Trading

Krugman distinguished this situation from typical corporate insider trading based on three key factors. First, the information involved is among the most sensitive national security secrets, far exceeding typical corporate financial data.

Second, while the information might seem non-specific, the massive transaction itself acts as a powerful signal. If large bets are suddenly placed anticipating de-escalation during a conflict with Iran, it strongly suggests foreknowledge of Trump’s impending announcement.

Krugman asserted that such market activity carries more weight and reliability than the President’s own public statements regarding negotiations. The third point relates to morality: trading on national secrets via financial transactions is fundamentally similar to outright selling those secrets to foreign or domestic powers.

He speculated that the trades were likely executed by a large financial operator who purchased the information from someone close to the White House, rather than a White House staffer making the trade directly.

Circumstantial Evidence of Wrongdoing

Krugman contrasted this with previous examinations of suspicious stock trades by government staffers, which often lacked definitive proof. In this case, however, the sheer size of the transaction occurring all at once, just 15 minutes before the major policy shift, makes coincidence highly improbable.

He concluded that while it is statistically possible for such an event to be random, the circumstantial evidence pointing toward wrongdoing is exceptionally strong.