Short squeeze across all of Asia, trying to profit from "war"? French oil giant Total made a "historic" surge in buying Middle Eastern crude in March, but now may be facing huge losses.

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French energy giant Total staged a textbook-level "long kills long" tragedy amid the market turmoil triggered by the Middle East war.

In March, the company frantically bought up Middle Eastern crude oil, pushing Asian benchmark oil prices to historical extremes, only to trigger a market collapse the moment it stopped bidding itself. Now, it is highly likely to be deeply mired in huge losses.

According to Bloomberg, Total's trading division bought a cumulative 69 cargoes of Dubai benchmark crude oil in the Platts pricing window this month, whereas the total annual volume traded in this market for 2025 is only 347 cargoes. Several traders said this scale is unprecedented in their professional experience.

This unprecedented buying spree, against the backdrop of market liquidity severely shrinking due to the war, pushed Asian benchmark oil prices above $170 per barrel, setting an all-time record.

However, when Total briefly stopped bidding on Wednesday, the market immediately collapsed—Oman futures plunged by up to $48, and Murban crude dropped by nearly $20. Coupled with the gradual reopening of the Hormuz Strait, more traders started to stand on the opposite side of Total, and Asian oil prices further plummeted.

Notably, amid the war windfall, supply chains for everything from beer and instant noodles to cosmetic containers across Asia have plunged into severe chaos due to the energy crisis. Scenes of consumers panic-buying garbage bags and instant noodles are spreading across South Korea, Japan, India, and China.

Unprecedented buying spree: Nearly 20% of annual trading volume bought in a month

Dubai crude is the most important pricing benchmark in the Middle East; major oil producers such as Saudi Arabia and the UAE reference it for pricing, and procurement contracts in major Asian consumer countries are largely anchored to this benchmark. According to Bloomberg, derivatives contracts linked to Dubai reached about $200 billion in trading volume last year.

Under the Platts pricing window mechanism, the trading parties exchange derivatives contracts worth 25,000 barrels each time, and when the total transactions reach 20 contracts, the buyer receives one cargo of 500,000 barrels of physical oil. In March alone, Total bought 69 cargoes, meaning its participation in this market equated to about 20% of the total annual volume for 2025.

Multiple people involved in the trading told Bloomberg that Total's bidding behavior imposed strong one-sided upward pressure on prices when market liquidity was already extremely scarce. After the Strait of Hormuz was closed due to war, a large amount of supply inside the Persian Gulf could not enter the global market, and Platts soon stopped including Gulf barrels in its assessment, sharply reducing the supply available for pricing.

Against this backdrop, Total's massive buying was like pouring oil on dry tinder.

Oil prices peak at $170: Serious divergence between Asia and global benchmarks

About a week ago, when WTI crude was trading near $100 per barrel and Brent briefly soared close to $120, Asian benchmark Dubai and Oman crude surged above $170 per barrel, setting a record for any variety of crude worldwide and creating an extremely rare divergence between Asian oil prices and global benchmarks.

Bloomberg, citing traders, said that within the pricing window, related contracts once had a premium as high as $60 over Dubai swaps—while under normal circumstances, premiums above a few dollars relative to benchmarks are already rare.

The logic behind Total's massive purchases, according to market participants, can be interpreted as a bet: A bet that the Middle East war will continue to squeeze supply over the coming months—because the goods traded now won’t be shipped until May.

However, some traders taking the opposite side against Total said they weren’t judging the duration of the war but believed that prices had been pushed so high by Total’s bidding that short selling instead became an extremely attractive short-term trade.

Abrupt end: Stopping bidding triggers market collapse

According to Bloomberg, Total briefly stopped bidding on Wednesday, crushing the market.

Oman futures plunged by up to $48, and Murban crude dropped by nearly $20. As both were near expiry, activity in near-month contracts was already low, and the sudden contraction in liquidity magnified price swings.

Meanwhile, more and more traders realized that crude shipments through the Strait of Hormuz to Asia (China, India, Japan) were gradually returning to normal, Asian oil prices dropped further, and more market participants began to stand against Total.

This situation put Total in an extremely passive position. ZeroHedge analysis notes that if Total still holds a large number of long positions bought at high prices, once faced with margin call pressure, it will be forced to sell at any price, further accelerating the decline in oil prices. This French energy giant pushed Asian oil prices up on an "historic scale", but now may face losses of a similar magnitude on its books.

The cost of war gains: Asian supply chains on the brink of collapse

Total's aggressive move came at the most severe moment in Asia’s energy crisis, and its price-raising effect has compounded the woes of already fragile Asian supply chains.

According to Reuters, businesses and consumers across Asia—from beer, chips, instant noodles, to toys and cosmetics—are paying a heavy price for the energy crisis triggered by war. Asia is more reliant than other parts of the world on crude oil, natural gas, fuels, and fertilizers from the Middle East, making it most vulnerable to supply disruptions.

The most acute shortage at present is naphtha—mainly from the Persian Gulf and used to make plastics and petrochemical products—an essential raw material for modern manufacturing. According to Reuters, Choi Gun-soo, the head of a 57-year-old plastic film factory in South Korea, said some raw material suppliers have raised prices by up to 50%, while others have stopped supplying altogether, forcing the factory to cut production capacity to 20%–30% of normal. "This is the hardest hit we’ve ever taken. We were really shocked," he said.

On the consumer end, panic buying has spread in South Korea, with supermarket garbage bags running short and rationed; Japan's Wasabeef potato chip maker Yamayoshi Seika was forced to halt production due to a shortage of heavy oil for boilers; China’s synthetic rubber output is expected to drop by about one third in April because of the war.

Against this backdrop, Total's large-scale bidding behavior has been interpreted by the market as a deliberate "short squeeze"—taking advantage of dried-up Asian market liquidity and fragile supply chains to monopolize pricing benchmark supplies, push up oil prices, and cash in on the war premium.

However, as shipping through the Strait of Hormuz gradually recovers and market sentiment reverses, the outcome of this high-stakes gamble may be Total itself paying the heaviest price for this "war windfall."

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