Hedge funds pile on bullish bets on oil

Hedge fund bets on rising Brent crude prices hit a fresh record as tension in the oil-rich region reached a whole new level, sending prices to their highest in more than two years. Disruptions in exporting countries such as Libya, Nigeria and Venezuela in past months had not fazed investors enough to trigger strong rallies, but Saudi Arabia and Iran? That’s another story. “Most of the political risk has been smallerscale,” Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts, said.

“But, when you start talking Saudi Arabia and Iran that gets people’s animal spirits flowing.” Saudi Arabia and Iran not only churn almost 14 million barrels a day of crude, or more than 40% of production from the Organization of Petroleum Exporting Countries, but they are also rival regional powers behind major Middle Eastern conflicts. The anti-corruption drive of Crown Prince Mohammed bin Salman against Iranian influence has stoked a war in Yemen, the isolation of Qatar and now raises the spectre of war in Lebanon.