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Oil prices have surged in recent weeks following the conflict between Israel and Iran. The latest catalyst came over the weekend when the U.S. military launched targeted strikes on Iran’s nuclear facilities in Natanz and Fordow. This marks a significant escalation in the U.S.-Iran tensions and raises fears of a broader Middle East conflict.
Brent oil futures rose to $79.00 per barrel, whereas West Texas Intermediate crude futures jumped to $73.84 per barrel. Both contracts initially surged as high as 4% to four-month highs, with Brent briefly rising as high as $81 a barrel (read: Oil ETFs Jump on Escalation in Middle East Tensions).
Given this, the appeal for leveraged energy ETFs has increased as these offer huge gains in a short time compared with simple products. Investors can tap the bullish trend in the sector with the help of leveraged ETFs. These are ProShares Ultra Oil & Gas ETF (DIG - Free Report) , Direxion Daily Energy Bull 2X Shares (ERX - Free Report) , Direxion Daily S&P Oil & Gas Exploration & Production Bull 2X Shares (GUSH - Free Report) and MicroSectors Oil & Gas Exploration & Production 3X Leveraged ETN (OILU - Free Report) .
Iran can retaliate in response, attack the Gulf oil infrastructure and disrupt shipping lanes. The situation has reignited fears of supply disruptions, particularly the potential closure of the Strait of Hormuz, which transports around one-third of the world’s seaborne oil. Analysts warned that disruption of up to 20 million barrels per day in extreme retaliation could be at stake.
Analysts warn that if the conflict drags on or draws in other regional powers, crude prices could breach the $100 mark. JP Morgan analysts forecast that under a "severe outcome," a closure of the Strait of Hormuz can push oil prices to $120-$130 per barrel.
Meanwhile, the Energy Information Administration (“EIA”) slashed its U.S. crude oil production estimates by 50,000 barrels for 2026 to 13.37 million barrels per day. This will be the first decline on an annual basis in U.S. output since 2021. The EIA left projected output growth for 2025 unchanged at 210,000 barrels per day.
Conversely, the oil cartel, OPEC+, agreed to increase oil output by 411,000 barrels a day (bpd) in July. By the end of July, more than 60% of the bloc’s planned 2.2 million bpd increase will be implemented (read: Here's Why Energy ETFs Outperformed Last Week: Will the Rally Last?).
With OPEC+ holding roughly 6 million barrels per day in spare capacity, and U.S. production likely to ramp up at prices above $70 per barrel, the upside to oil prices can be limited.
ProShares Ultra Oil & Gas ETF seeks to deliver twice (2X or 200%) the daily performance of the S&P Energy Select Sector Index. It has been able to manage $81.5 million in its asset base and trades in a good volume of about 60,000 shares per day on average. DIG charges 95 bps in fees per year.
Direxion Daily Energy Bull 2X Shares (ERX - Free Report)
Direxion Daily Energy Bull 2X Shares creates a two-times leveraged position in the Energy Select Sector Index while charging 89 bps in fees a year. Direxion Daily Energy Bull 2X Shares is a popular and liquid option in the energy leveraged space, with an AUM of $235.3 million and an average trading volume of around 473,000 shares.
Direxion Daily S&P Oil & Gas Exploration & Production Bull 2X Shares (GUSH - Free Report)
Direxion Daily S&P Oil & Gas Exploration & Production Bull 2X Shares offers a two-times exposure to the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index. It has accumulated $275.5 million in its asset base and the average daily volume is solid at 1.4 million shares. Direxion Daily S&P Oil & Gas Exploration & Production Bull 2X Shares charges 91 bps in annual fees.
MicroSectors Oil & Gas Exploration & Production 3X Leveraged ETN (OILU - Free Report)
MicroSectors Oil & Gas Exploration & Production 3X Leveraged ETN is linked to three times leveraged performance of the MicroSectors Oil & Gas Exploration & Production Index. The index provides exposure to large-capitalization companies that are domiciled and listed in the United States and active in the exploration and production of oil and gas. MicroSectors Oil & Gas Exploration & Production 3X Leveraged ETN has amassed $37.4 million in its asset base and trades in a lower average volume of 294,000 million shares. It charges investors 95 bps in annual fees and expenses.
Bottom Line
As a caveat, investors should note that these products are extremely volatile and suitable only for short-term traders. Additionally, the daily rebalancing — when combined with leverage — may make these products deviate significantly from the expected long-term performance figures (see: all the Leveraged Equity ETFs here).
Still, for ETF investors who are bullish on the energy sector for the near term, either of the above products can be an interesting choice. Clearly, a near-term long can be intriguing for those with high risk tolerance and a belief that the trend is the friend in this corner of the investing world.
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Leveraged Energy ETFs to Tap Oil Price Surge
Oil prices have surged in recent weeks following the conflict between Israel and Iran. The latest catalyst came over the weekend when the U.S. military launched targeted strikes on Iran’s nuclear facilities in Natanz and Fordow. This marks a significant escalation in the U.S.-Iran tensions and raises fears of a broader Middle East conflict.
Brent oil futures rose to $79.00 per barrel, whereas West Texas Intermediate crude futures jumped to $73.84 per barrel. Both contracts initially surged as high as 4% to four-month highs, with Brent briefly rising as high as $81 a barrel (read: Oil ETFs Jump on Escalation in Middle East Tensions).
Given this, the appeal for leveraged energy ETFs has increased as these offer huge gains in a short time compared with simple products. Investors can tap the bullish trend in the sector with the help of leveraged ETFs. These are ProShares Ultra Oil & Gas ETF (DIG - Free Report) , Direxion Daily Energy Bull 2X Shares (ERX - Free Report) , Direxion Daily S&P Oil & Gas Exploration & Production Bull 2X Shares (GUSH - Free Report) and MicroSectors Oil & Gas Exploration & Production 3X Leveraged ETN (OILU - Free Report) .
Iran can retaliate in response, attack the Gulf oil infrastructure and disrupt shipping lanes. The situation has reignited fears of supply disruptions, particularly the potential closure of the Strait of Hormuz, which transports around one-third of the world’s seaborne oil. Analysts warned that disruption of up to 20 million barrels per day in extreme retaliation could be at stake.
Analysts warn that if the conflict drags on or draws in other regional powers, crude prices could breach the $100 mark. JP Morgan analysts forecast that under a "severe outcome," a closure of the Strait of Hormuz can push oil prices to $120-$130 per barrel.
Meanwhile, the Energy Information Administration (“EIA”) slashed its U.S. crude oil production estimates by 50,000 barrels for 2026 to 13.37 million barrels per day. This will be the first decline on an annual basis in U.S. output since 2021. The EIA left projected output growth for 2025 unchanged at 210,000 barrels per day.
Conversely, the oil cartel, OPEC+, agreed to increase oil output by 411,000 barrels a day (bpd) in July. By the end of July, more than 60% of the bloc’s planned 2.2 million bpd increase will be implemented (read: Here's Why Energy ETFs Outperformed Last Week: Will the Rally Last?).
With OPEC+ holding roughly 6 million barrels per day in spare capacity, and U.S. production likely to ramp up at prices above $70 per barrel, the upside to oil prices can be limited.
Here, we have profiled the above-mentioned ETFs:
ProShares Ultra Oil & Gas ETF (DIG - Free Report)
ProShares Ultra Oil & Gas ETF seeks to deliver twice (2X or 200%) the daily performance of the S&P Energy Select Sector Index. It has been able to manage $81.5 million in its asset base and trades in a good volume of about 60,000 shares per day on average. DIG charges 95 bps in fees per year.
Direxion Daily Energy Bull 2X Shares (ERX - Free Report)
Direxion Daily Energy Bull 2X Shares creates a two-times leveraged position in the Energy Select Sector Index while charging 89 bps in fees a year. Direxion Daily Energy Bull 2X Shares is a popular and liquid option in the energy leveraged space, with an AUM of $235.3 million and an average trading volume of around 473,000 shares.
Direxion Daily S&P Oil & Gas Exploration & Production Bull 2X Shares (GUSH - Free Report)
Direxion Daily S&P Oil & Gas Exploration & Production Bull 2X Shares offers a two-times exposure to the daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index. It has accumulated $275.5 million in its asset base and the average daily volume is solid at 1.4 million shares. Direxion Daily S&P Oil & Gas Exploration & Production Bull 2X Shares charges 91 bps in annual fees.
MicroSectors Oil & Gas Exploration & Production 3X Leveraged ETN (OILU - Free Report)
MicroSectors Oil & Gas Exploration & Production 3X Leveraged ETN is linked to three times leveraged performance of the MicroSectors Oil & Gas Exploration & Production Index. The index provides exposure to large-capitalization companies that are domiciled and listed in the United States and active in the exploration and production of oil and gas. MicroSectors Oil & Gas Exploration & Production 3X Leveraged ETN has amassed $37.4 million in its asset base and trades in a lower average volume of 294,000 million shares. It charges investors 95 bps in annual fees and expenses.
Bottom Line
As a caveat, investors should note that these products are extremely volatile and suitable only for short-term traders. Additionally, the daily rebalancing — when combined with leverage — may make these products deviate significantly from the expected long-term performance figures (see: all the Leveraged Equity ETFs here).
Still, for ETF investors who are bullish on the energy sector for the near term, either of the above products can be an interesting choice. Clearly, a near-term long can be intriguing for those with high risk tolerance and a belief that the trend is the friend in this corner of the investing world.