Hedge funds have lifted their bullish positioning in Brent crude to its highest level since May as renewed fighting between the US and Iran raises the prospect of further disruption to oil shipments through the Strait of Hormuz, according to a report by Bloomberg.
Money managers increased their net-long Brent position by 37,837 contracts to 261,435 in the week through 1 September, according to ICE Futures Europe data on futures and options. That was the highest level of bullish positioning in more than three months.
Hedge funds have also increased their exposure to US crude, with net-long positions reaching their highest level since June, according to Commodity Futures Trading Commission data.
The shift in positioning comes as oil markets absorb a fresh escalation in the conflict. US military strikes and Iranian retaliation have complicated efforts to restore shipping through the Strait of Hormuz, a critical conduit for global energy supplies.
Iran has also renewed threats to vessels using the waterway, disrupting a period in which tanker traffic had begun to recover. The renewed military confrontation has increased concerns that shipping restrictions could persist, keeping a significant risk premium embedded in crude prices.
The latest positioning data suggest hedge funds are increasingly betting that geopolitical tensions will support oil prices, reversing some of the caution that had characterised crude trading during the earlier period of relative calm.
The Strait of Hormuz remains central to those expectations. Any sustained reduction in traffic through the waterway could tighten global oil supplies and leave producers and consumers facing higher prices.
Refined products have experienced an even sharper rally. Hedge funds’ net-bullish positioning in diesel has risen to its highest level since March as simultaneous conflicts in the Middle East and Ukraine put additional pressure on fuel markets.
US retail diesel prices reached a record $5.85 a gallon on Thursday, highlighting the impact that disruptions to crude and refined-product supply are already having on consumers.
