Hedge funds rush into oil long bets as Mideast conflict grows

CFTC positioning data for US crude futures was delayed until Monday due to a holiday this week. (Image: Bloomberg)

Hedge funds boosted their bullish position in Brent crude by the most since early October as Israel’s strikes against Iran’s nuclear program imperiled a region that produces around a third of the world’s oil.

Money managers increased their net-long position on the global benchmark by 76,253 lots to 273,175 lots, the biggest gain in eight months, in the week ended June 17, according to figures from ICE Futures Europe. Short-only positions tumbled to the lowest in more than four months.

Oil futures spiked as much as 13% on June 13 as Iran and Israel escalated a conflict that has loomed over global oil markets for 20 months, but had yet to reduce output. Traders were likely hedging against a broader clash in the Middle East or reduced flows through the Strait of Hormuz, exacerbating a bullish tilt in positioning data that was already visible last week.

Some analysts had speculated some version of these worst-case scenarios could push prices well over $100 a barrel. In another corner of the market, Brent crude options implied volatility surged last week to levels not seen since Russia’s invasion of Ukraine in 2022, while oil’s bullish premium also soared.

CFTC positioning data for US crude futures was delayed until Monday due to a holiday this week.