Traders increased short bets on Brent crude threefold since March as geopolitical risks in the Middle East appear priced out of oil markets.
Portfolio managers have ramped up short positions in Brent crude futures, tripling them between late March and early June. The latest commitment of traders data shows a growing conviction that oil prices will decline despite ongoing tensions in the Middle East, particularly around the Strait of Hormuz.
Short positions surged as traders seemingly dismissed the potential for supply disruptions from regional conflicts. Prior to this shift, oil markets had priced in a risk premium due to geopolitical instability, but recent trading patterns suggest a reversal of that sentiment.
The move reflects broader market complacency, with traders betting that supply risks are overstated or that alternative supply routes will mitigate disruptions. No immediate price reaction was detailed in the data.