NEW YORK (Realist English). Hedge funds ramped up bullish oil positions to levels not seen since May in late August and early September, driven by a fresh wave of US‑Iran escalation.
In the week ending September 1, asset managers increased their net long position in benchmark Brent crude by 37,837 contracts — to 261,435, the highest level in three months.
At the same time, bets on US WTI crude rose to highs not seen since June, while US retail diesel prices hit an all‑time record of $5.85 per gallon — traders are pricing in a protracted conflict in the Persian Gulf.
From Renewed Strikes to Record Bets
The trigger for the sharp shift in sentiment was the renewed exchange of strikes between Washington and Tehran in late August.
On August 30, US forces struck Iran’s Larak Island, followed by Iranian missile attacks on US bases in Jordan, Kuwait and Bahrain.
This broke the relative lull that had prevailed after the June agreements and brought back fears of long‑term supply disruptions through the Strait of Hormuz.
| Indicator | Value | Change |
| Net long position in Brent | 261,435 contracts | +37,837 over the week |
| Net long position in WTI | High since June | — |
| Brent (close, September 4) | $95.85 per barrel | +8.8% over the week |
| US retail diesel | $5.85 per gallon | All‑time high |
| Net long position in gasoline | 89,263 contracts | High since December |
The Strait of Hormuz as the Main Catalyst
The key factor driving the bets has been the effective blockade of the Strait of Hormuz. Following the renewed strikes, Iran began attacking vessels passing through the strategic waterway, dashing hopes for a gradual recovery in shipping.
As analysts note, the military escalation is adding a significant geopolitical premium to energy prices.
Before the war, one‑fifth of the world’s oil passed through the strait. Currently, according to shipping analytics, traffic remains at minimal levels, with crude flows fluctuating between 5–8 million barrels per day depending on the intensity of attacks.
Product Markets: Diesel and Gasoline Hit Records
The impact of the escalation has been even more pronounced in the refined products market. The combined effect of conflicts in the Middle East and Ukraine has driven a sharp surge in diesel prices.
On Thursday, September 4, US retail diesel prices hit an all‑time high of $5.85 per gallon.
Hedge funds responded immediately: net long positions in diesel rose to highs not seen since March, while gasoline positions reached 89,263 contracts — the highest level since December.
According to experts, traders have never been so bullish on gasoline at the start of September, with fuel prices at record highs for this time of year.
Macroeconomic Consequences: Rates and Inflation
Rising energy prices are creating fresh inflationary pressure on global markets. The yield on 10‑year US Treasury notes rose to 4.81% — its highest level since late 2023. Markets are already pricing in more than a 50% probability of rate hikes by the four leading central banks, with the Fed’s September hike probability estimated at around 70%.
For hedge funds, the combination of rising commodity prices and rising bond yields creates a challenging trading environment. Equity indices, particularly technology stocks, have come under dual pressure: expensive oil fuels inflation, while high rates weigh on company valuations.
Betting on War
The build‑up of bullish oil positions to highs not seen since May is a direct reflection of hedge funds’ assessment of escalation risks. Over the week, asset managers added nearly 38,000 contracts, pushing the net long position in Brent to levels unseen since the start of summer.
The increase in bets on refined products — diesel and gasoline — has been even more aggressive, indicating expectations of a shortage not so much of crude oil as of finished fuel.
Significantly, markets continue to price in a geopolitical premium, despite the Trump administration’s attempts to project control over the situation. Traffic through the Strait of Hormuz remains at minimal levels, and Iranian attacks on vessels and US bases continue. Meanwhile, Israel has warned of possible strikes on civilian infrastructure in response to attacks from Tehran.
