With renewed tensions in Iran, hedge funds are increasing their bets on rising oil prices, with long positions reaching their highest level since May.

As a new round of conflict between the United States and Iran intensifies, market concerns are rising about a potential long-term disruption to energy transport through the Strait of Hormuz, prompting hedge funds to increase their bullish stance on Brent crude oil to its highest level since May.

Weekly options and futures data released by the Intercontinental Exchange (ICE) Europe showed that, in the week ending September 1, fund managers increased their net long positions in Brent crude oil by 37,837 contracts to 261,435 contracts, the highest level in more than three months.

Meanwhile, data from the U.S. Commodity Futures Trading Commission (CFTC) showed that net long positions in crude oil also rose to their highest level since June.

Crude oil prices have rebounded this week. The continued US bombing campaign and Iran's retaliatory attacks on US military bases have made it even more difficult to resume shipping through this vital global energy transport artery.

As of press time, Brent crude futures rose 0.35% on Friday, and 8.8% for the week, to $95.85 a barrel, higher than the previous high on July 24.

The renewed escalation of the conflict also prompted Iran to begin attacking ships passing through the Strait of Hormuz, disrupting the previously relatively calm situation—during which shipping through the strait had gradually resumed.

The risk of the region falling into another cycle of military escalation continues to rise as Iran launches multiple missile strikes against Jordan, Kuwait, and Bahrain, and Israel warns that it will target civilian infrastructure if attacked by Tehran.

Prices of refined petroleum products, including diesel, surged even more sharply as simultaneous wars in the Middle East and Ukraine further squeezed fuel supplies. Net long positions in diesel have risen to their highest level since March; U.S. retail diesel prices hit a record high of $5.85 per gallon on Thursday.

Net long positions in gasoline surged to 89,263 contracts, the highest level since December last year. Seasonally, traders have never been so bullish on gasoline at this time of year, as gasoline prices are currently near their record highs from September.

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