Morgan Stanley Notes Oil Traders Avoiding Long-Term Bets Amid Geopolitical Uncertainty
Oil traders are increasingly avoiding long-term positions due to heightened geopolitical risks from ongoing conflicts in Iran and Ukraine, according to Morgan Stanley. Brendan Ross, co-head of global oil trading at the firm, noted that traders have become more cautious and selective with their risk exposure, focusing on shorter time horizons and specific instruments rather than broad derivatives. This shift has led to reduced liquidity for longer-dated contracts across energy markets. The volatility in oil prices this year reflects these tensions, as Brent crude fluctuated between $60 and $126 per barrel amid off-and-on negotiations between the U.S. and Iran and continued hostilities involving Russia and Ukraine. The physical-financial dislocation has been most pronounced in product markets due to supply disruptions, with fuel costs rising sharply across Europe and record retail diesel prices reported in the U.S.
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Topics: geopolitical risk oil trading strategies