Hedge funds have raised their net long positions in crude oil futures to the highest level in over 18 months, driven by escalating instability in Venezuela and Iran. The shift reflects growing concerns over supply disruptions in key oil-producing regions.
- Net long positions in crude oil futures reached 2.1 million contracts by January 6, 2026
- Brent crude rose 6.3% to $98.40 per barrel over the week
- Venezuela’s oil output fell to 1.6 million bpd in December 2025
- Iran’s crude exports face ongoing disruptions due to sanctions and instability
- Energy ETFs gained an average of 4.7% over two weeks
- XOM and CVX stock prices rose 5.2% and 4.9% respectively
Hedge funds have increased their net long positions in crude oil futures to 2.1 million contracts as of the week ending January 6, 2026, marking the largest such exposure since mid-2024. This surge follows a sustained rise in geopolitical risk premiums, particularly due to civil unrest in Venezuela and heightened tensions between Iran and regional adversaries. The Commodity Futures Trading Commission’s weekly Commitment of Traders report shows a 15% week-over-week increase in long positions, while short positions declined by 8%. The aggregate long position now exceeds the 18-month average by 34%, signaling a significant shift in market sentiment. Oil benchmark prices responded immediately, with Brent crude rising 6.3% over the same period to trade at $98.40 per barrel. Venezuela’s oil output has fallen to approximately 1.6 million barrels per day in December 2025, down from 2.2 million in early 2023, amid worsening infrastructure failures and reduced maintenance. Meanwhile, Iran’s crude exports have faced intermittent disruptions due to international sanctions enforcement and internal security challenges, limiting its ability to fill supply gaps. The rally in oil prices has impacted related financial markets, with energy sector ETFs gaining an average of 4.7% over the past two weeks. Major integrated oil companies, including ExxonMobil (XOM) and Chevron (CVX), saw their stock valuations rise by 5.2% and 4.9%, respectively, as investors priced in higher long-term profitability. Energy-focused hedge funds have also reported improved inflows, with a combined $1.2 billion in new capital entering the space during the last month. The trend underscores the market’s sensitivity to geopolitical risk, even in the absence of a full-scale conflict. Analysts warn that sustained unrest in either Venezuela or Iran could push Brent above $110 if supply disruptions extend beyond temporary outages.