Oil prices fell on Monday after US President Donald Trump called on other countries to help preserve the Strait of Hormuz.
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The movement in oil due to the news flow of the Iran war has attracted retail investors to the world’s most traded commodity, further increasing volatility.
Small investors have poured record amounts into oil-related exchange traded funds (ETFs) in recent weeks as prices soared on concerns of Middle East conflict and prolonged disruptions to the flow of oil through the Strait of Hormuz.
The rush has some analysts pointing to similarities with past retail trading frenzy in stocks like GameStop and commodities like silver, suggesting the oil market could be subject to “meme-style” trading.
“Oil is now arguably a retail ‘meme theme’, with retail investors flocking to the leading pure-use oil ETFs since the outbreak of the Iran conflict,” said Viraj Patel, global macro strategist at Vanda Research.
Oil ETF retail net purchases reached a record high of $211 million on March 12, surpassing the previous peak seen during market turmoil in May 2020, according to data from Vanda Research.
The popular United States Oil Fund (USO) hit an all-time high of $42 million on March 6, and had its third-best day for retail inflows last Thursday, hitting $32 million.
Of course, strategic stockpiling is not a permanent solution, and until the solution is peace, oil will continue to trade like a “meme stock.”
The surge in retail investor participation comes as geopolitical tensions dominate the oil market, particularly as participation in the oil market becomes easier and barriers for retail investors are lowered.
Retail traders can gain exposure through ETFs such as the USO and Brent Oil Fund (BNO), but small futures contracts have also made direct trading more accessible.
Traders are keeping an eye on the possibility of further supply disruptions, especially as shipping through the Strait of Hormuz, a key chokepoint in global energy flows, is effectively shut down.
According to market participants, these uncertainties have made oil prices unusually volatile, attracting speculative interest from traders looking to profit from rapid price fluctuations.
GameStop, Silver, and now Oil?
Tom Sosnoff, CEO of financial technology platform RothDog, said commodities are becoming the latest speculative venue for retail investors.
“Physical commodities like oil have become speculative meme plays for 2026. First it was silver and gold, now it’s oil,” Sosnoff said.
“Markets like noise and volatility. The perception of retail traders is that where there is the most activity, there is the most opportunity.”
Meme trading is a popular asset for retail investors online, generating rapid capital inflows and large price fluctuations that don’t necessarily reflect underlying fundamentals.
Reddit users are discussing buying oil ETFs to take advantage of the Iran conflict-fueled stock rally, with traders boasting about quick profits and debating whether the rally is still “boneless,” reminiscent of speculation seen in previous meme stocks episodes.
Crude oil prices since the beginning of the year
Several experts emphasized that oil is different from the stocks that fueled the meme stock frenzy in the past.
Saul Kavonic, an energy analyst at MST Marquee, said the comparison to meme stocks is likely a reflection of increased volatility rather than individual investors dictating the direction of the market.
“Oil is likely to trade with more volatility and widened price volatility during wars, given the scope for sudden escalation and de-escalation, and the varying rhetoric of the belligerents that may suddenly signal different war trajectories,” he said. of crude oil volatility index It rose to its highest level since 2020.
Other analysts said the influx of retail traders reflected a frank bet on supply disruptions.
Andy Lipow, president of Lipow Oil Associates, said many investors were reacting to images of geopolitical turmoil and possible supply shortages.
Retail investors should remember that oil trading is like a game of musical chairs. When the music stops, it’s not pretty.
“Retail investors are paying close attention to the news and watching on TV as oil supply disruptions occur with no clear end in sight. This presents an opportunity for these investors to make money in anticipation of further price increases,” Lipau said.
But unlike meme stocks, the oil supply disruption is real and based on actual production outages, which the IEA estimates at about 10 million barrels per day, Lipow stressed.
But analysts warn that similar volatility could quickly turn against retail traders if it were to attract them.
“Retail investors need to remember that oil trading is like a game of musical chairs. When the music stops, it’s not pretty,” Sosnoff said.
Some institutional analysts said oil’s movements increasingly resemble those of speculative assets during periods of high geopolitical stress.
Macquarie strategists said the current environment, characterized by war risks, supply uncertainties and government intervention, could lead to continued extreme volatility in oil prices.
“Of course, strategic stockpiling is not a permanent solution. Until there is a peaceful solution, oil will continue to trade like a ‘meme stock,'” said Thierry Wismann, a financial market economist at the bank.
