Oil hedging desks are experiencing unprecedented activity as producers capitalize on the biggest crude futures rally since March 2022. Dealer reports show this week already breaking records for hedging volume, with firms like Attara working around the clock to handle demand. The Iran conflict has created a rare window for producers to lock in future sales using derivatives like options and swaps.

The surge in hedging has dramatically widened the premium between short-term and later-dated contracts, with the June-December US crude spread jumping to $8.21 a barrel from just $1.48 two weeks ago. While producers rush to secure profits, airlines and other consumers that had abandoned hedging are now scrambling to protect against further price increases after years of dismissing it as too risky.

Options contracts have gained traction with put strikes around $55-$60, while Kirk Edwards of Latigo Petroleum says they will hedge further if prices climb. "We're not there yet at the levels we want to hedge at," Edwards noted, "but we're a heck of a lot closer than we were last week." The open-ended nature of the Iran conflict has clients cautiously "dripping in their hedges" rather than making massive inflows.