Hedge funds push bullish oil bets to May high amid US-Iran clashes

Hedge funds have pushed their bullish wagers on Brent crude to the highest level in more than three months as renewed military clashes between the United States and Iran threaten to choke off energy flows through the Strait of Hormuz.

Money managers increased their net-long positions on Brent crude by 37,837 contracts to 261,435 in the week ending September 1, according to ICE Futures Europe Intercontinental Exchange, Inc. ↘ 0.99% data on futures and options, Bloomberg reported Friday. Net-long bets on U.S. crude also climbed to their highest since June, per Commodity Futures Trading Commission data.bloomberg+1

Escalation Drives Fear Premium

The positioning shift follows a sharp escalation in the US-Iran conflict. On September 1, U.S. Central Command carried out strikes against Iranian targets near the Strait of Hormuz, citing attacks on American forces and commercial shipping. In a move Axios reported as the first of its kind, the U.S. military struck two Iranian government tankers under a new "tanker for tanker" policy approved by President Trump.axios+1

Iran retaliated by firing missiles at American bases and at ships transiting the strait, while also launching strikes at Jordan, Kuwait, and Bahrain, according to the Associated Press. Commodity data provider Kpler recorded only four commodity-carrying vessels transiting the Strait of Hormuz on September 1, far below the 10-day average of roughly 13. Before the conflict, daily transit volume through the strait averaged 130 to 140 vessels.apnews+1

Prices Surge, Refined Products Hit Records

Brent crude gained roughly 8.8% for the week, approaching $96 per barrel and breaking above the interim high set on July 24. West Texas Intermediate traded near $92 per barrel, up more than 9% for the week, with both benchmarks posting their largest weekly gains since mid-July.news.futunn+1

Refined products climbed even faster. U.S. retail diesel prices hit a record $5.85 per gallon on Thursday, while net-long positions in diesel reached their highest since March. Net-long gasoline bets surged to 89,263 contracts, the highest since December and a record for this time of year.finance.biggo+1

Diplomatic Signals Mixed

Vice President JD Vance told reporters Thursday that he would not characterize the situation as a war, saying large-scale combat operations had concluded weeks ago, but added that Washington will not negotiate with Tehran unless it stops attacking commercial shipping. Republican Representative Pat Harrigan of North Carolina, a member of the House Armed Services Committee, offered a blunter assessment: "From a military standpoint, we are clearly in a situation of combat difficulties and stalled negotiations".finance.biggo

OPEC+ is expected to keep its October production policy unchanged at a meeting on Sunday, though shipping disruptions have diminished the group's influence over prices. Citi raised its third-quarter average Brent forecast from $80 to $86 per barrel, while ANZ analysts lifted their near-term target to $95, warning that further escalation poses upside risks.finance.biggo