Hedge funds were wrong-footed by last week’s oil rally after building record short positions in Brent crude just before fresh US sanctions on Russian energy giants sent prices soaring, according to a report by Bloomberg citing data from ICE Futures Europe.

The data shows that money managers increased bearish bets on Brent by 40,233 lots to 197,868 in the week to 21 October — the largest net-short position on record. The positioning reflected expectations of a growing supply glut, with floating storage volumes climbing and forecasts pointing to a sustained surplus.

Those expectations were upended when Washington unexpectedly sanctioned Rosneft PJSC and Lukoil PJSC, cutting Russian oil flows to major buyers including India and China. Analysts at Rystad Energy estimate the measures could disrupt up to 600,000 barrels per day of Russian output, tightening markets and supporting prices.

The timing left hedge funds on the wrong side of the trade as crude futures jumped in response to the announcement.

The ICE data offers rare insight into speculative positioning amid the ongoing US government shutdown, which has suspended official weekly reports on US oil holdings. As of September, money managers were already holding record-low bullish exposure — a stance that may prove costly if supply tightens further.