The recent escalation of geopolitical tensions in the Middle East has finally pushed crude oil back into triple-digit territory, with West Texas Intermediate (WTI) crude oil settling above the $100 per barrel mark on March 30, 2026. This is the first time the benchmark has reached this threshold since 2022, while Brent crude surged nearly 55% in March alone.
With the energy sector experiencing a seismic shift, this price rally has placed a glaring spotlight on Oil exchange-traded funds (ETFs), as investors scramble to hedge against inflation and capitalize on a rapidly tightening supply market.
As a cloud of uncertainty continues to overcast the global economy, investors must understand the link between the ongoing conflict and its impact on the oil industry, and how far that impact could extend, before turning to specific ETFs.
The Iran War & Its Implications on Oil
The primary catalyst for this spike in oil prices is the five-week-long conflict involving the United States, Israel and Iran. According to major news outlets, President Donald Trump has threatened to destroy Iran’s oil wells and power plants unless the Strait of Hormuz is reopened.
This chokepoint is critical, as a prolonged blockade could take 4 to 5 million barrels per day off the market, according to David Roche, strategist at Quantum Strategy, in remarks to CNBC. Concurrently, Yemen’s Houthis have joined the conflict by attacking Israel and threatening the Bab el-Mandeb Strait.
This "back and forth" of strikes has literally crippled supply routes, forcing oil prices even higher. For oil investors, this supply shock is beneficial, as it directly boosts the revenues of energy companies. In this environment, upstream producers benefit from higher realized prices, while distributors and service providers see increased demand, though they face higher logistical costs.
The Case for Oil ETFs
The "extent" of this impact on the energy sector, specifically the oil industry, is best seen in capital flows. According to LSEG Lipper, global equity funds focused on the energy sector have attracted inflows of $2.1 billion so far this month and are on track to surpass the 12-year high of $2.2 billion recorded in June 2014 (as cited in Reuters).
Thus, for investors, this “global shock” transforms oil from a simple commodity into a high-yield strategic asset, making diversified ETFs more attractive than individual stocks.
Looking ahead, market analysts suggest that the persisting Hormuz disruption can take WTI to $120-$135 per barrel by year-end. This bullish outlook builds a strong case for oil ETFs, which would allow investors to capture the anticipated oil price rally but with managed risk.
Oil ETFs in Spotlight
Considering the aforementioned discussion, investors looking to capitalize on the rallying oil price trend may consider the following ETFs that track this space:
United States Oil ETF USO
This fund, with net assets worth $2.73 billion, tracks the daily price movements of light, sweet crude oil. USO has surged 68.4% since Feb. 28, 2026, when the U.S.-Israel joint force attacked Iran.
The fund charges 70 basis points (bps) as fees. It traded at a good volume of 39.82 million shares in the last trading session.
United States Brent Oil ETF BNO
This fund, with net assets worth $889.1 million, tracks the daily price movements of Brent crude oil. BNO has soared 55.1% since Feb. 28, 2026.
The fund charges 114 bps as fees. It traded at a good volume of 6.21 million shares in the last trading session.
Defiance Oil Enhanced Options Income ETF USOY
This fund, with net assets worth $78.3 million, seeks income while maintaining the opportunity for indirect exposure to the share price of the United States Oil Fund. USOY has surged 34.6% since Feb. 28, 2026.
The fund charges 122 bps as fees. It traded at a good volume of 1.02 million shares in the last trading session.
VanEck Oil Services ETF OIH
This fund, with net assets of $2.35 billion, provides exposure to 26 U.S.-listed companies in the upstream oil services sector, including firms engaged in oil equipment, oilfield services and drilling. OIH has gained 1.3% since Feb. 28, 2026.
The fund charges 35 bps as fees. It traded at a volume of 0.80 million shares in the last trading session.
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United States Oil ETF (USO): ETF Research Reports
United States Brent Oil ETF (BNO): ETF Research Reports
VanEck Oil Services ETF (OIH): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).