Hedge Funds Add 76,000 Brent Longs After Iran-US Tensions

ICE Futures Europe data show money managers increased long-only Brent futures and options positions by almost 76,000 contracts in the week to July 14, raising total long holdings to more than 357,000 contracts. The change was the largest weekly build in Brent long positions since late 2016 and followed a period of reduced speculative exposure that had fallen to a seven-month low.

The rise in long positions came after a spike in military tensions between the United States and Iran in early July. Retaliatory attacks by Iran targeted Gulf states and commercial shipping, disrupting traffic through the Strait of Hormuz, a major route for crude shipments.

The flow disruption coincided with crude prices reaching roughly one-month highs, partially reversing a near 30% decline in benchmark oil prices recorded in the second quarter. The stronger front-end market was reflected in the rapid increase in bullish Brent bets during the reporting week.

Pressure extended into refined fuels. Diesel and gasoline markets firmed in the same period, lifting refining margins in key regions. On U.S. futures exchanges, long-only positions in NYMEX heating oil rose to levels not seen since March, while net-long diesel positions posted their largest weekly increase since February.

Supply developments outside the Middle East also affected market positioning. Continued Ukrainian strikes on Russian refining infrastructure disrupted production flows, and Moscow’s decision to halt diesel exports tightened available diesel volumes and reduced potential surplus exports.

Traders and fund managers cited nearer-term shipping activity through the Strait of Hormuz, Russian refinery throughput and any further geopolitical developments as the main variables to watch for future changes in crude and refined product flows.