Net losses of 41% are still increasing! The bearish oil market bets $9.77 billion on the end of the Iran conflict.

Although most crude oil short positions have suffered heavy losses so far, there is currently a group of traders heavily leveraged, betting that the conflict involving GEO Group Inc will cause oil prices to plummet significantly. Data shows that in March, ETF investors poured $977 million into the 2x short Bloomberg Crude Oil ETF-ProShares (SCO.US) - including both contrarian new short positions and traders doubling down on existing positions - setting a record for the highest monthly inflow since the fund's inception in 2008. The SCO is designed to achieve twice the inverse return of daily oil price fluctuations. Despite reaching a historical high in inflows, the fund's total assets currently stand at only $970 million, even lower than the total net inflow for that month. Rocky Fishman, founder of Asym 500, bluntly stated, "This is a bet on 'conflict ending soon' trade." On Tuesday, after Trump signaled the possibility of ending the conflict in Iran again, the fund surged 8% in a single day. However, the ETF still accumulated a 41% decline in March, marking its worst monthly performance in almost six years. In contrast, the benchmark index it tracks rose 25% during the same period. In March, Brent crude oil briefly touched $119 per barrel, falling to around $102 in early April, but still significantly higher than the closing price of $72 at the end of February. Even in the event of a ceasefire, short sellers may still face challenges. It is estimated that the actual blockade in the Strait of Hormuz has affected approximately one-fifth of global oil supply. Analysts point out that due to the rerouting of oil tanker routes and the readjustment of the spot market, oil prices may remain high in the coming months - meaning that short bets require not only a easing of tensions, but also a rapid return to normalcy, a scenario that few anticipated. Although the market remains optimistic about a possible easing of tensions, the attacks this week continue. A tanker near Qatar was attacked, causing a fire that has now been extinguished, according to the British Navy. However, bearish bets are only one side of the market. Bullish funds also hit record highs - the US Crude Oil ETF (USO.US) attracted approximately $700 million in March, the highest monthly inflow since the outbreak of the pandemic; the US Brent Crude Oil Fund (BNO.US) also attracted $600 million, setting a new record. As a result, market divergence intensifies, with leveraged funds on both sides of the conflict betting on different outcomes. Todd Sohn, Chief ETF Strategist at Strategas Securities, said, "I believe the inflows into SCO reflect multiple factors, including directional trades betting on a reversal in oil prices, as well as hedging and arbitrage activities. Especially when these unique funds become 'market focus', this situation often arises." Meanwhile, Fishman believes that although some ETF demand may stem from technical factors like short selling, the flows in March mainly reflect pure directional bets.