Global benchmark Brent crude surged past $100 a barrel for the first time since May, thanks to intensifying Middle East conflicts, Houthi tanker attacks in the Red Sea, and mounting fears of global supply blockades.
Yemen's Houthi group confirmed a targeted military strike on two Saudi Arabian oil tankers in the Red Sea. Saudi state media later verified the assault, reporting that one of the vessels caught fire while sailing, as mentioned on Al Jazeera.
U.S. President Donald Trump has threatened a “major military punishment” against the Houthis if they continue to attack ships. The mid-June truce between Iran and the United States has collapsed, triggering a resumption of hostilities around the strategic Strait of Hormuz.
Moreover, on July 13, 2026, Donald Trump announced that the United States would reimpose its blockade around the Strait of Hormuz and charge a 20% fee on cargo passing through the strategic waterway, per Yahoo Finance.
In recent days, U.S. forces carried out strikes on numerous Iranian targets, while Iran responded by targeting U.S. military facilities in the Gulf region and intercepting vessels in the Strait of Hormuz.
Brent to Top $120?
Goldman Sachs said Brent could surpass $120 a barrel in the fourth quarter and average $100 next year if tensions in the Strait of Hormuz persist through next year, with tensions in the Bab el-Mandeb Strait and the Suez Canal adding to the crisis, as quoted on Al Jazeera.
While Brent reaching $120 is not Goldman's base-case forecast and may appear slightly optimistic, given the trajectory of the conflict, the risks are increasingly skewed toward further military escalation rather than a near-term ceasefire or durable diplomatic solution (read: Can Brent Crude Rally to $120? Energy ETFs Likely to Win).
ETF Areas to Win & Lose
If oil prices continue to gain in the medium term, the exchange-traded fund (ETF) areas mentioned below are likely to benefit or suffer.
Energy – United States Brent Oil Fund LP (BNO)
This is the most obvious choice. If oil prices stage an uptrend, oil ETFs are sure to benefit. United States Brent Oil Fund LP BNO gained about 31% over the past month. Oil exploration ETFs like State Street SPDR S&P Oil & Gas Exploration & Production ETF XOP are also likely to surge ahead. The ETF added about 15% over the same time frame.
Small-Caps – iShares Russell 2000 ETF (IWM)
The U.S. economy is in decent shape despite the geopolitical crisis. Small-cap stocks are mainly domestically focused and are less exposed to geopolitics. Moreover, as the world’s largest oil producer, the United States is somewhat protected from global supply shocks, though not entirely immune, according to Deutsche Bank, per CNN, as quoted on Yahoo Finance.
Note that the S&P 500-based ETF SPY has lost 0.6% over the past five days, while iShares Russell 2000 ETF IWM has been flat. Moreover, small-cap stocks are less perturbed by occasional AI-related shocks.
ETFs to Lose
Retail – SPDR S&P Retail ETF (XRT)
Rising energy prices do not bode well for retailers, as consumers’ wallets get squeezed by higher spending at gas stations. In fact, not only oil prices but overall inflation is also likely to rise, hurting consumers’ buying power.
Thus, SPDR S&P Retail ETF XRT could struggle in a rising oil-price environment. Moreover, the Fed may hike rates in the medium term to fight accelerating inflation. If rates rise, that would be another blow to consumers’ purchasing power.
India -- iShares India 50 ETF (INDY)
India is almost entirely dependent on imports for its oil needs. An oil-price rise could therefore be a major headwind for Indian investments, putting iShares India 50 ETF INDY in focus. The fund has lost about 3.8% over the past one month.
Airlines – U.S. Global Jets ETF (JETS)
The airline sector performs better in a falling crude scenario, as energy costs form a major portion of the overall cost of this sector. Hence, airlines ETF U.S. Global Jets ETF JETS is likely to underperform in the current situation. The JETS ETF has lost 9.7% over the past month.
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iShares Russell 2000 ETF (IWM): ETF Research Reports
State Street SPDR S&P Retail ETF (XRT): ETF Research Reports
United States Brent Oil ETF (BNO): ETF Research Reports
State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP): ETF Research Reports
iShares India 50 ETF (INDY): ETF Research Reports
U.S. Global Jets ETF (JETS): ETF Research Reports
This article originally published on Zacks Investment Research (zacks.com).