Short squeeze across all of Asia, trying to make a "war profit"? French oil giant TotalEnergies made a "historic" surge in Middle Eastern crude oil purchases in March, and now it may face huge losses.

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In the market turmoil sparked by the Middle East war, the French energy giant TotalEnergies staged a textbook-grade “kill more, get killed more” tragedy.

During the company’s frantic buying spree in March—snapping up Middle East crude oil and pushing Asian benchmark prices to historical extremes—it then detonated a market collapse the moment it stopped bidding itself, and it is now highly likely to be mired in massive losses.

According to Bloomberg, this month TotalEnergies’ trading desk accumulated purchases of 69 ships of Dubai benchmark crude during the Platts pricing window, while the total volume of that market for all of 2025 would be only 347 ships. Multiple traders said this scale is unprecedented in their years of experience.

This unprecedented buying spree, in a context where market liquidity has been dramatically shrinking due to the war, has pushed Asian benchmark crude prices to above $170 per barrel—the highest record in history.

However, when TotalEnergies briefly paused its bidding on Wednesday, the market collapsed immediately—Oman futures plunged by as much as $48, and Murban crude’s decline also came close to $20. Combined with the Strait of Hormuz gradually resuming normal navigation, more traders began taking positions against TotalEnergies, and Asian oil prices then fell sharply further.

It’s also worth noting that in this “war profits” scramble across Asia, supply chains—from beer, instant noodles to cosmetic container packaging—have fallen into serious disarray due to the energy crisis, and scenes of consumers engaging in panic buying of garbage bags and instant noodles are spreading in South Korea, Japan, India, and China.

Unprecedented buying spree: one month buys nearly 20% of the full year’s trading volume

Dubai crude is the most important pricing benchmark in the Middle East. Global top oil producers such as Saudi Arabia and the UAE all use it as a reference for pricing, and many procurement contracts for major Asian consuming countries are also heavily anchored to this benchmark. According to Bloomberg, last year the trading volume of derivative contracts linked to Dubai was about $200 billion.

Under the mechanism in the Platts pricing window, each time the trading counterparties exchange equivalent derivative contracts covering 25,000 barrels. When the two sides累计成交 reach 20 contracts, the buyer receives one cargo of physical crude of 500,000 barrels. TotalEnergies’ purchase of 69 cargoes in March means its participation size in this market is about 20% of the total成交 volume for all of 2025.

Several people involved in the trades told Bloomberg that TotalEnergies’ bidding behavior created intense one-way upward pressure on price formation despite market liquidity being extremely scarce even before the bids. After the Strait of Hormuz was closed due to the war, large numbers of barrels within the Persian Gulf were unable to enter global markets; and soon after the war broke out, Platts also stopped including Gulf barrels in the assessment, leading to a sharp reduction in the supply sources available for pricing.

Against this backdrop, TotalEnergies’ large-scale buying was like pouring oil on dry kindling.

Oil prices top $170: Asian market and global benchmarks severely diverge

About a week earlier, when WTI crude was trading near $100 per barrel and Brent crude briefly surged to around $120, Asian benchmarks—Dubai and Oman crude—still spiked to above $170 per barrel, setting the highest record in history for any crude oil grade worldwide. A rare extreme divergence emerged between Asian oil prices and the global benchmark.

Bloomberg cited traders saying that within the pricing window, the related contracts once traded at a premium as high as $60 to the Dubai swap—where normally, a premium of more than a few dollars for crude relative to the benchmark would already be rare.

To market participants, the logic behind TotalEnergies’ massive buy could be interpreted as a bet: a bet that the Middle East war would keep compressing supply over the coming months—because the cargoes being traded now won’t be shipped until May.

However, some traders on the other side of TotalEnergies said they weren’t betting on how long the war would last. Instead, they believed that prices had been pushed so high by TotalEnergies’ bidding, making shorting a highly attractive short-term trade.

Abrupt stop: stopping the bids triggers a market crash

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

Oman futures fell by as much as $48, and Murban crude also dropped by nearly $20. Because both were close to expiration and trading activity in the nearby contracts was already low, the sudden contraction in liquidity amplified the magnitude of price swings.

Meanwhile, more and more traders realized that oil shipments to Asia (China, India, Japan) via the Strait of Hormuz were gradually returning to normal. Asian oil prices fell sharply further, and more market participants started taking positions against TotalEnergies.

This left TotalEnergies in an extremely passive situation. ZeroHedge analysis said that if TotalEnergies still holds a large number of long positions bought at high levels, and then faces margin calls, it would be forced to dump at any price, further accelerating the downward move in oil prices. The French energy giant once pushed up Asian oil prices on a “historic” scale; now it could face equally large mark-to-market losses.

The cost of “war profits”: Asia’s supply chain teeters on the brink of collapse

TotalEnergies’ aggressive moves came at the most severe moment of the Asian energy crisis. The effect of pushing up oil prices piled extra pressure onto an already fragile Asian supply chain.

According to Reuters, across Asia—ranging from beer, potato chips, and instant noodles to toys and cosmetics—businesses and consumers are paying a heavy price for the energy crisis caused by the war. Asia relies more than other regions on crude oil, natural gas, fuels, and fertilizers from the Middle East, making it especially vulnerable to supply disruptions.

The most scarce right now is naphtha—an input mainly sourced from the Persian Gulf and used to produce plastics and petrochemical products, a foundational feedstock for modern manufacturing. Reuters reported that Choi Gun-soo, who leads a South Korean plastic film factory with 57 years of history, said some raw material suppliers have raised prices by as much as 50%, while others have run out of stock, forcing the plant’s capacity to be cut to 20% to 30% of normal levels. “This is the most severe shock we’ve ever experienced. We were really shaken,” he said.

On the consumer side, panic buying has spread across South Korea. Garbage bags are running low in supermarkets and the stores have started limiting purchases. In Japan, the manufacturer of the Wasabeef potato chip brand, Yamafuji Confectionery, was forced to halt production due to a shortage of heavy fuel oil for boilers. In China, synthetic rubber output is expected to drop by about one-third in April due to the war.

It is precisely in this context that TotalEnergies’ large-scale bidding has been interpreted by the market as a deliberate “short squeeze” operation—when liquidity in Asian markets is drying up and the supply chain is in precarious shape, pushing up oil prices by monopolizing the benchmark delivery source and pocketing a war premium.

However, as shipping through the Strait of Hormuz gradually recovers and market sentiment turns around, the outcome of this high-stakes gamble may be that TotalEnergies itself pays the heaviest price for these “war profits.”