- Hedge funds dramatically increased their bets on rising oil prices after a missile attack from Iran on Israel.
- The attack sparked fears of a wider conflict disrupting oil supplies from the Middle East.
- Oil prices jumped to their highest weekly gain since January 2023 as investors anticipated a possible Israeli response.
Following the Iranian missile attack on Israel, hedge funds and other portfolio managers boosted last week their bullish bets on Brent crude by the highest volume since 2018.
The long positions – bets that oil prices will rise – surged by the equivalent of 139 million barrels last week, according to data from Intercontinental Exchange Inc. on the commitment of traders, cited by Bloomberg. This commitment of traders report tracks the weekly period to Friday and is published under the European Union’s Markets in Financial Instruments Directive, MiFID.
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The Iranian missile attack against Israel sparked an oil price rally, and Brent crude prices jumped by as much as 8% last week. Market participants started pricing in a bigger war premium, while another part of the market, those holding record short positions, scrambled to cover the shorts.
As a result, intense buying in Brent and other petroleum-linked futures ensued. Crude oil prices jumped last week by the highest weekly percentage since January 2023, as the market is awaiting an Israeli response to the Iranian missile attack. The possibility of Israel attacking Iran’s energy infrastructure isn’t being ruled out and is also fueling buying in petroleum futures.