A trader has made an estimated £100m from gambling on the rise in oil prices. Andrew Serotta made the killing for his employer Vitol, a Swiss trading company, when he bought 40,000 oil futures contracts nine months ago.

The American, who divides his working life between Geneva and Houston, Texas, is one of many savvy traders profiting from – and some say fuelling – the soaring price of oil, which last week touched $135 a barrel and is expected to force the price of petrol at the pumps in Britain to 116p a litre.

“We just watched, thinking they were going to get run over,” said one rival Houston-based trader of Serotta’s purchase. “To a bystander it looked crazy.”

In July last year, the price of a barrel of oil was hovering at about $70. Almost everyone expected the price to fall during 2008 to around $60 a barrel, but Serotta bought 40,000 futures contracts linked to a price of $80 a barrel.

Futures are a financial instrument which commit the buyer to paying an agreed price at a specified later date, meaning they make a profit if prices go up in the intervening period.

Soaring oil prices have made the futures secured by Serotta look extremely cheap and he has made a fortune by selling them on to clients at a substantial gain.

Until now, Vitol had attracted its greatest publicity for incurring a £9m fine for paying kickbacks to Saddam Hussain’s regime under the United Nations oil for food programme.

Oil prices are now squeezing the finances of millions of people: a year ago, petrol was 96p a litre. While the AA has warned motorists to expect to spend £250 more on petrol this year, many hedge fund managers, investment bankers and oil giants are becoming richer as the price of “black gold” soars.

Oil experts disagree strongly on the outlook for prices. Arjun Murti, a Goldman Sachs analyst, was widely derided when he suggested in 2005 that oil prices would rise to $100 a barrel. Murti recently suggested that prices could hit $200.

Matt Simmons, founder of the American investment bank Simmons & Company, believes the cost could even hit $500.

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