In a significant repositioning, hedge funds sharply increased their net-long exposure to Brent crude futures as the probability of a swift US-Iran nuclear accord diminished, raising concerns over potential disruptions to Iranian oil supply, according to a report by Bloomberg.
According to data from ICE Futures Europe for the week ending 20 May, money managers expanded their net-long Brent positions by 12,185 contracts, bringing the total to 163,329 – marking the largest weekly increase since early April and the most constructive positioning since the prelude to former President Trump’s tariff escalation.
The shift in sentiment was driven by renewed geopolitical tensions and mixed signals surrounding the fate of US-Iran nuclear negotiations. Market participants responded to midweek intelligence suggesting Israel may be preparing for preemptive strikes on Iranian nuclear infrastructure. Although Iranian Foreign Minister Abbas Araghchi indicated a diplomatic resolution remains within reach – conditional on Iran’s ability to maintain uranium enrichment – investors interpreted the uncertainty as a bullish signal for crude.
In contrast, sentiment toward West Texas Intermediate (WTI) crude softened. Data from the Commodity Futures Trading Commission (CFTC) revealed that long-only positions in WTI dropped to their lowest level in five weeks, coinciding with a US government report showing a second consecutive weekly build in domestic crude inventories.
