True to his word, Donald Trump is all out to enforce the ban on Iran. It’s getting a thriller and messier OPEC Middle East geopolitics.

This has caused the Oil prices to rise by more than 5% over the last 3 sessions, which has been contrary to our expectations.


The current future rates on MCX are:

July series : 4,814

August series : 4,755



The gap has increased from 15 points to 59 points. This is providing for an exciting arbitrage opportunity to buy August future and sell July future. Although spread has increased since we last noticed this opportunity, however, we feel that this is a good arbitrage opportunity and this anomaly will correct. This is not a normal spread and should correct soon.

For each pair you can expect a Rs. 59 profit as the prices converge presenting an opportunity for atleast 7.5% profit on the overall strategy for a period less than 1 month.

The risk of the strategy is the prices diverging further.

This step helps Saudi Arabia to now garner more of a market share in oil exports as they have been desiring and gives them an upper hand in OPEC and hence, the Middle east geopolitics. Now will Saudi Arabia oblige Donald Trump by softening Oil prices as desired by him?

Keep watching this space for more updates.

 

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