The Commodities Feed: Oil near $90 on escalating Middle East risks
Lead — As geopolitical tensions escalate in the Middle East, oil prices remain firmly supported near $90 per barrel, reflecting heightened supply risk perceptions. Per the full note source, recent attacks on vessels in the Strait of Hormuz, coupled with renewed fighting in Lebanon, are intensifying concerns over potential regional disruptions that complicate U.S.-Iran negotiations. The increase in speculative positioning, with money managers building net long positions in ICE Brent, underscores bullish sentiment. The commentary highlights the potential for continued price support as geopolitical factors evolve.
What the desk is arguing
The desk posits that oil prices, particularly ICE Brent, will remain buoyed due to persistent geopolitical risks in the Middle East. Per the full note source, the recent escalation in hostilities, notably in Lebanon and around key shipping routes, signals a precarious supply environment that could drive prices higher.
The commentary notes a significant increase in speculative positioning, with money managers boosting their net long positions by 76,026 lots, marking the most substantial bullish stance since June 2026. This surge in bullish sentiment, amidst ongoing U.S. drilling increases, suggests traders are betting on continued upward pressure on prices as global dynamics shift.
How other firms see it
Firms like bofabank and jpms express optimistic views regarding oil prices in light of market conditions, reflecting a broader consensus on the bullish outlook given the ongoing volatility. In contrast, cs possesses a more cautious stance, suggesting that any price increases may be limited by demand elasticity and economic headwinds.
Key pairs to watch would include USD/CAD, which may reflect shifts in oil-driven sentiment, and AUD/USD, sensitive to commodity price fluctuations. These dynamics could influence central bank decisions in both Canada and Australia, intertwined with oil market fluctuations.
Key takeaways
- 01Oil prices near $90/bbl driven by geopolitical tensions.
- 02Speculative positioning has turned bullish, with significant long positions.
- 03Price support is likely as regional conflicts escalate.
- 04US drilling activity continues to increase.
Market implications
Traders should monitor the $90 per barrel level closely as a potential resistance point, particularly if tensions remain high. The bullish positioning in oil futures suggests a critical moment for those watching for any breakout past this threshold.
Risks to this view
A de-escalation of tensions in the Middle East, such as a successful negotiation between the U.S. and Iran, could lead to a rapid unwinding of speculative positions. Additionally, if global economic conditions worsen and lead to reduced oil demand, this could substantially shift the current bullish sentiment.
Articles The Commodities Feed: Oil near $90 on escalating Middle East risks Published 08:12 Commodities daily Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Oil remains supported near $90/bbl by Middle East tensions and attacks on vessels in the Strait of Hormuz Ewa Manthey and Warren Patterson ICE Brent prices remain supported by renewed fighting in Lebanon and attacks on vessels in the Strait of Hormuz Energy - Brent near $90/bbl on supply risks ICE Brent traded just below $90/bbl in early Asian trading, extending Monday’s gains. Prices remained supported by renewed fighting in Lebanon and attacks on vessels in the Strait of Hormuz, raising concerns over regional supply disruptions and complicating prospects for a US-Iran deal. Several vessels, including ships linked to Abu Dhabi National Oil Co., were reportedly targeted in the waterway late last week.
Speculative positioning turned more bullish. Money managers increased their net long position in ICE Brent by 76,026 lots to 240,748 lots as of last Tuesday, the largest bullish position since early June 2026. The increase was primarily driven by fresh long positions, with gross longs rising by 51,818 lots week-on-week.
In NYMEX WTI, net longs increased by 2,665 lots to 103,715 lots. Meanwhile, US drilling activity continued to expand . The US oil rig count rose by one to 455 active rigs last week, marking a third consecutive weekly increase, according to Baker Hughes.
The count is now 43 rigs higher than a year ago and at its highest level since May 2025. Drilling activity has trended higher since the start of the US-Iran conflict in late February. The EIA estimates US crude oil production will average 13.8mb/d in 2026, up from 13.6mb/d in 2025, before increasing further to 14.2mb/d in 2027.
Metals - Copper rally extends on supply tightness LME copper rose 1.7% this morning to a record high of $14,396/t, extending its rally for a third session and marking a seventh consecutive week of gains. The cash/3M spread widened to a backwardation of $518.5/t, the strongest since October 2021, highlighting acute near-term supply tightness. LME inventories fell for a 42nd consecutive session to 204,975 tonnes, their lowest level since February.
Continued flows to the US and China, where prices trade at premiums to the LME, have drained stocks, while nearly half of remaining inventories are already earmarked for withdrawal. On the supply side, Chile's copper commission Cochilco expects national copper output to fall 2.6% year-on-year to 5.3mt in 2026, reflecting weaker production from Codelco and BHP operations. Copper is now up around 16% year-to-date.
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