Oil traders are increasingly wary of maintaining long-term positions as ongoing conflicts in Iran and between Russia and Ukraine cloud the outlook for coming months, according to a senior figure at Morgan Stanley. Brendan Ross, co-head of global oil trading at the bank, noted that traders have shifted derivative exposure toward shorter-dated contracts and adopted a more measured approach to risk assessment.

Speaking at the Asia Pacific Petroleum Conference in Singapore on Wednesday, Ross explained that market participants are now far more selective in their strategies. Instead of maintaining broad derivative positions, they are focusing on specific financial instruments tailored to their precise needs. "People are being more precise about their risk," he said. "They have identified exactly what they want, and what constitutes an unexpected loss."

The oil market has experienced considerable turbulence driven by rapidly shifting developments in the US-Iran conflict and the ongoing Russia-Ukraine war. Intermittent negotiations between Washington and Tehran, coupled with repeated Ukrainian strikes on Russian energy infrastructure, have heightened volatility across the energy complex. Brent crude has traded within a wide range of $60 to $126 per barrel this year, while refined product prices have moved even more dramatically.

Ross observed that traders are actively reviewing their portfolios and shedding risk positions they do not genuinely desire. This behavior has contributed to thinning liquidity, particularly in the longer-dated segments of the curve. "People are really just trading contracts three to six months out," he noted, "and then the lack of liquidity makes further-dated contracts even less tradeable."