Hedge funds are betting heavily on the rise of WTI oil prices at the fastest pace in four months, making U.S. crude oil the "last lifeline" for global supply.

Amid simultaneous supply disruptions in the world's three major energy transport chokepoints the Strait of Hormuz, the Bab el-Mandeb Strait in the Red Sea, and the Black Seahedge funds are making a swift return to the U.S. crude oil market at the fastest pace since March of this year. The latest data from the U.S. Commodity Futures Trading Commission (CFTC) shows that as of the week ending July 28, fund managers significantly increased their net long positions in WTI crude oil by 21,402 contracts to 108,307 contracts, marking the largest weekly increase in nearly four months. Speculators' bullish sentiment toward WTI crude oil has reached its highest level since mid-June. Meanwhile, net long positions in U.S. gasoline have risen to a four-month high, and net long positions in diesel have hit their highest level in nearly five months. In the past few weeks, hedge funds have transitioned from a state of "hesitation" to "explosion" in their positions on WTI crude oil. As of the week ending July 7, net long positions in WTI crude had decreased by 19,507 contracts to 65,681 contracts, marking the third consecutive week of reduction. However, as U.S.-Iran tensions escalated and the Strait of Hormuz was once again blocked, speculative funds reversed direction. By the week ending July 14, net longs increased by 11,704 contracts to 86,383 contracts. The pace of accumulation then significantly accelerated, with net longs rising by 0.6% to 86,905 contracts by the week ending July 21. By the week of July 28, net longs surged by 21,402 contracts in a single weekthe fastest increase since March. In contrast to the frenzy surrounding WTI crude oil, speculators' bullish bets on Brent crude oil have remained relatively stable, with net longs decreasing by a modest 6,948 contracts to 185,083 contracts. This divergence clearly indicates that, amid simultaneous disruptions in multiple global supply channels, U.S. crude oil is viewed as the most certain "last supply buffer." Triple Supply Shocks: The Global Oil Market Faces a "Perfect Storm" The hedge funds' aggressive accumulation is rooted in a supply crisis occurring simultaneously across three major geographic regions. First Shock: Strait of HormuzThe "throat" of global oil is once again locked down. Since the outbreak of the U.S.-Iran war at the end of February, the Strait of Hormuz, through which approximately one-fifth of the world's oil and liquefied natural gas trade passes, has been effectively closed. After a temporary ceasefire between the U.S. and Iran in mid-June allowed shipping to slowly resume, the ceasefire was deemed "effectively void" on July 12, leading to another near-complete closure of the strait and a halt in tanker shipping. Second Shock: Bab el-Mandeb StraitSaudi Arabia's "oil escape route" is closing. With the closure of the Strait of Hormuz, Saudi Arabia significantly shifted its crude oil exports to the Red Sea's Yanbu Port, increasing exports from approximately 970,000 barrels per day a year ago to over 4.5 million barrels per day. However, the Iran-backed Houthi rebels in Yemen announced a "maritime blockade" against Saudi Arabia on July 20, and subsequently attacked two Saudi tankers in the Red Sea with missiles and drones. A complete blockade of the Bab el-Mandeb Strait would disrupt the majority of Saudi oil exports, resulting in a further reduction of global oil supply by about 7%. Third Shock: The Black SeaKazakhstan's oil lifeline cut off by drones. Between July 17 and 20, four tankers loading oil at the Caspian Pipeline Consortium (CPC) terminal were consecutively attacked by Ukrainian drones. The CPC terminal is the main export route for the majority of Kazakhstan's oil, and the attacks led to a temporary halt in loading operations, forcing Kazakhstan to reduce oil production from 2.07 million barrels per day to 1.63 million barrels per day. Even more concerning, this is merely the tip of the iceberg. According to Germany's Der Spiegel, the global oil market is simultaneously facing a "fivefold shock"in addition to the three supply lines mentioned above, ongoing drone attacks by Ukraine on Russian refineries have reduced crude processing at Russian refineries to the lowest level in 21 years, and Moscow has effectively banned diesel exports; meanwhile, the U.S. Strategic Petroleum Reserve has rapidly depleted due to large exports. U.S. Crude Oil: The Global "Last Supply Buffer" In this multifaceted supply crisis, U.S. crude oil is becoming the "last lifeline" coveted by global buyers. Despite U.S. crude oil exports being at historic highs, traders expect export volumes to rise further as foreign buyers seek to compensate for global supply disruptions. The appeal of U.S. crude oil lies in its "geographic immunity" from geopolitical risks in the Strait of Hormuz, Bab el-Mandeb Strait, and the Black Seawhen all three major transport corridors are blocked, crude oil from the Gulf of Mexico remains one of the few incremental supply sources that can still freely flow to international markets. However, this "safety buffer" is not unlimited. The U.S. Strategic Petroleum Reserve has quickly depleted due to massive exports over the past few months, and while U.S. shale oil producers may increase production capacity due to high oil prices, it is challenging to fully compensate for the global daily supply gap of millions of barrels in the short term. Signs of tension in the refined product market are also flashing. CFTC data shows that speculators have pushed net long positions in U.S. gasoline to their highest level in four months, while net long positions in diesel have reached their highest level in nearly five months. This indicates that the market is not only betting on rising crude oil prices but also on the further expansion of refining profitswhen global refining capacity tightens due to capacity losses in countries like Russia and Saudi Arabia, refined products may become the focus of the next price surge.