Geopolitical tensions in the Middle East have escalated sharply over the past week, with the United States and Israel engaged in an intensifying conflict with Iran that has disrupted production and shipping across the region. For countries in the line of fire, this is a terrifying scenario, but for the oil industry, it has turned into a windfall, driving crude above $100 per barrel for the first time since mid 2022 as traders rush to price in prolonged supply losses.

Notably, U.S. crude and Brent both smashed through the $100 threshold after attacks and threats around the Strait of Hormuz shut or slowed a route, while producers across the Gulf cut output as tanks filled and exports stalled.

This explosive move in crude creates a powerful tailwind for energy-focused exchange-traded funds (ETFs) and oil-heavy diversified commodity funds, many of which hold large positions in integrated majors, exploration and production (E&P) firms, refiners, pipeline operators, and oilfield services providers. These companies are expected to see a significant rise in profitability throughout the ongoing quarter as they capitalize on the higher price environment.

Now, before diving straight into the names of such funds, let us delve deeper into how the current war situation is benefiting the oil industry and its varied players, and how that is putting the spotlight on ETFs.

Correlation Among War, Supply Shortage & High Price

The current tension across the Middle East, with the abundant exchange of missiles and military drones across borders, is benefiting almost every major segment of the oil ecosystem, from upstream producers to midstream transporters and services companies, by essentially creating a supply shortage.

CNN Business has identified the current disruption through the Strait of Hormuz as "the biggest oil disruption in history," with an estimated 20% of global oil supply disrupted—roughly twice the record set during the 1956 Suez Crisis. As oil demand stayed stable, such a disrupted supply chain pushed the price of oil in the global market. 

In the same line of thought, Goldman Sachs also warned on March 6, 2026, that daily flows through the strait were down 90%, which is creating unprecedented supply tightness that might push prices even higher.

This increase in oil prices is creating tailwinds for oil industry players across diverse segments. Exploration and production companies are the most direct beneficiaries, with profit margins expanding significantly as revenue per barrel climbs while production costs remain relatively fixed. Major producers like Exxon Mobil (XOM Quick QuoteXOM - Free Report) , Chevron (CVX Quick QuoteCVX - Free Report) and Occidental Petroleum should see substantial revenue increases with every dollar rise in oil prices.

Oil services companies like Schlumberger Nv, Halliburton and Baker Hughes are also expected to benefit as higher prices encourage producers to increase capital expenditure on new drilling projects. On the other hand, pipeline and transportation companies such as Enterprise Products Partners benefit from increased volume as producers bring more oil to market, while refiners like Marathon Petroleum and Valero Energy experience improved profitability when refining margins expand during supply tightness.

ETFs Poised to Gain

The intensifying conflict has accelerated gains that were already building. Kuwait, UAE and Iraq have all announced output cuts, while the Strait of Hormuz remains essentially impassable. As Kpler analyst Homayoun Falakshahi warned, if the strait remains closed through March, "we could go to $150 a barrel."

Against this backdrop, ETFs, which allow investors to capture the gains across the entire value chain—from drillers to refiners — are a more prudent choice of investment instead of a single-stock bet and the idiosyncratic risk associated with it.

In particular, Energy ETFs provide direct exposure to crude oil futures, meaning their value rises almost in lockstep with oil prices, which reached nearly $120 a barrel on March 9, 2026 (as cited in BBC). Other energy ETFs, which include major upstream, midstream and downstream operators as well as integrated players like BP, are also poised to benefit. 

Thus, for investors seeking exposure to the oil price rally, the following ETFs offer a diversified, liquid way to participate in what could be one of the most significant energy market movements in decades.

State Street Energy Select Sector SPDR ETF (XLE Quick QuoteXLE - Free Report)

This fund, with net assets worth $39.13 billion, is the largest energy ETF. It offers exposure to 22 companies from the oil, gas and consumable fuel, energy equipment and services industries. Its top three holdings are XOM (23.59%), CVX (17.37%) and ConocoPhillips (6.99%).

XLE has surged 26% year to date. The fund charges 8 basis points (bps) as fees. It traded at a good volume of 88.58 million shares in the last trading session. 

Vanguard Energy Index Fund (VDE Quick QuoteVDE - Free Report)

This fund, with net assets worth $9.2 billion, offers exposure to 106 companies whose businesses are dominated by either of the following activities: the construction or provision of oil rigs, drilling equipment, and other energy-related service and equipment; or the exploration, production, marketing, refining, and/or transportation of oil and gas products. Its top three holdings are XOM (23.53%), CVX (15.27%) and ConocoPhillips (5.73%).

VDE has soared 26.3% year to date. The fund charges 9 bps as fees. It traded at a good volume of 1.97 million shares in the last trading session. 

United States Oil ETF (USO Quick QuoteUSO - Free Report)  

This fund, with net assets worth $2.11 billion, tracks the daily price movements of light, sweet crude oil. USO has surged 50.8% year to date.

The fund charges 70 bps as fees. It traded at a good volume of 142.12 million shares in the last trading session. 

Invesco Energy Exploration & Production ETF (PXE Quick QuotePXE - Free Report)

This fund, with a market value worth $88.6 million, offers exposure to 30 U.S. companies involved in the exploration and production of natural resources used to produce energy. Its top three holdings are Marathon Petroleum (5.24%), Valero Energy (5.22%) and Phillips 66 (4.95%).  

PXE has rallied 25.3% year to date. The fund charges 61 bps as fees. It traded at a volume of 0.12 million shares in the last trading session.

VanEck Oil Services ETF (OIH Quick QuoteOIH - Free Report)  

This fund, with net assets of $2.48 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. Its top three holdings are Schlumberger Nv (19.07%), Baker Hughes (12.51%) and Halliburton (7.20%). 

OIH has surged 33.1% year to date. The fund charges 35 bps as fees. It traded at a volume of 0.63 million shares in the last trading session.