Brent crude holds near $85 after short squeeze triggered by Hormuz blockade

Brent crude oil stabilized near $85 per barrel on Wednesday, July 15, following a sharp rally driven by a short squeeze that caught bearish traders off guard as geopolitical risks in the Middle East intensified.

Short Squeeze Unwinds Record Bearish Bets

The price jump followed weeks of record-high short positioning by hedge funds and speculative traders in Brent crude futures. Goldman Sachs The Goldman Sachs Group, Inc. ↘ 1.38% reported in late June that managed money accounts had sold roughly $7.5 billion of Brent exposure in a single week, part of a seven-week liquidation wave totaling approximately $24.8 billion that drove bearish positioning to a ten-year high.energynewsbeat

Rabobank strategist Michael Every observed that Brent crude has settled into a narrow $85-86 range after what he described as an aggressive short squeeze, with prices jumping 9 percent and then another 2.5 percent to reach $85. Every noted the price behavior is consistent with the outlook of Rabobank energy analyst Joe DeLaura, who has maintained a neutral view on Brent despite ongoing market volatility.tradingpedia+2

Hormuz Blockade and Pipeline Diplomacy

The catalyst for the squeeze came on July 13, when President Donald Trump announced on Truth Social that the United States would reinstate a naval blockade targeting Iranian shipping in the Strait of Hormuz. "We are reinstating the THE IRANIAN BLOCKADE, so named because it is only stopping Iran's ships or customers from entering or leaving," Trump wrote, adding that the U.S. would serve as "THE GUARDIAN OF THE HORMUZ STRAIT" and seek a 20 percent reimbursement fee on all cargo shipped through the waterway. CENTCOM confirmed enforcement would begin the following day.aljazeera+2

Trump later reversed the proposed fee, saying it would be replaced with "trade and investment deals" with Gulf states.facebook

Alternative Routes Take Shape

Alongside the blockade, Iraq, Syria, and the United States are moving to unveil a deal to revive the historic 500-mile Kirkuk-Baniyas pipeline to Syria's Mediterranean coast, according to Middle East Eye, with the agreement expected during Iraqi Prime Minister Ali al-Zaidi's meeting with Trump at the White House. Reuters Thomson Reuters Corporation ↗ 2.92% reported in April that Iraq, Saudi Arabia, and the UAE have been accelerating alternative export infrastructure to reduce dependence on the chokepoint. Iraq has already begun overland crude shipments through Syria and expanded flows through the Kirkuk-Ceyhan pipeline to Turkey.reuters+3

The convergence of record short positions, renewed sanctions enforcement, and infrastructure diplomacy has left Brent trading in a range that analysts describe as reflecting a precarious equilibrium — one that could shift rapidly if either geopolitical risks escalate further or supply disruptions ease.