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Oil Prices to Stay High for Long? ETFs to Gain/Lose
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Key Takeaways
Oil may stay above $100 if disruptions persist; Brent could even revisit 2008 highs in extreme scenarios.
Energy ETFs like BNO and XOP may gain; small caps like IWM relatively resilient.
Higher fuel costs hurt XRT, JETS and INDY; even miners like GDX face margin pressure.
Oil prices moved higher at the end of the week after damage to key energy infrastructure in the Middle East and the continued disruption of the Strait of Hormuz. Now three weeks into the conflict, there are few signs of de-escalation. The Strait of Hormuz – a critical oil transit route between Iran and Oman – has been effectively shut for 19 days, disrupting nearly 20% of global oil supply.
Goldman Sachs warned that elevated prices could persist through 2027 in a prolonged disruption scenario, per CNN, as quoted on Yahoo Finance. Brent crude topped the mark of $110.2 per barrel.
Analysts at Goldman noted that past supply shocks show oil can remain above $100 for extended periods when disruptions are severe and long-lasting, as mentioned on the above-said source.
Escalation in Conflict Keeps Markets on Edge
The recent surge in oil prices follows escalating tensions in the region. An Israeli strike on Iran’s South Pars gas field triggered retaliation targeting Qatar’s Ras Laffan LNG facility – the largest of its kind globally – intensifying supply concerns.
Despite Israeli Prime Minister Benjamin Netanyahu indicating restraint following appeals from President Donald Trump, markets remain cautious amid ongoing hostilities.
Goldman’s Projections
Goldman Sachs warned that in extreme scenarios, Brent crude could surpass its 2008 record of about $147 per barrel if disruptions persist. In a worst-case outlook, prices could average around $111 per barrel by late 2027 if supply remains constrained even after partial reopening, as mentioned in the same CNN source.
If oil prices continue to gain in the medium term, the below-mentioned ETF areas are likely to gain and lose.
ETFs to Gain
Energy – United States Brent Oil Fund LP (BNO)
This is the most obvious choice. If oil price stages an uptrend, oil ETFs are sure to benefit. The ETF (BNO - Free Report) gained about 51% over the past month. Oil exploration ETFs like XOP will also likely to surge ahead. The ETF (XOP - Free Report) added about 15% during the same time frame.
Small-Caps – iShares Russell 2000 ETF (IWM)
Although the U.S. economic growth has slowed lately, the economy is still in decent shape. 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 1.4% over the past five days while (IWM - Free Report) is down by 0.6%.
ETFs to Lose
Retail -- SPDR S&P Retail ETF (XRT)
Rising energy prices do not bode well for retailers as consumers’ wallets get squeezed from higher outlays on gas stations. In fact, not only oil, overall inflation will be rising, hurting consumers’ buying power. Thus, SPDR S&P Retail ETF (XRT - Free Report) will lose in a rising oil price environment.
India -- iShares India 50 ETF (INDY)
India is almost entirely dependent on imports to back its oil needs. An oil price rise could thus be a major headwind to India investing, putting iShares India 50 ETF (INDY - Free Report) in focus. The fund has lost about 11.7% 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 - Free Report) is likely to underperform in the current situation. The JETS ETF has lost 16.2% over the past one month.
Gold Mining – VanEck Gold Miners ETF (GDX)
Gold mining is heavily dependent on fuel, with 15–20% of all-in operating costs (per goldmoney.com) directly tied to energy (diesel for heavy equipment, electricity). The same source also highlights that beyond the diesel and electricity required to extract and process the metal, energy is needed to ventilate and cool underground mines as well. So, a sharp oil rally, like the one currently underway, is a key negative for miners’ profitability. (GDX - Free Report) is down about 22% over the past one month (read: A Few Reasons Why Gold ETFs Failed to Surge Amid Iran War).
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Oil Prices to Stay High for Long? ETFs to Gain/Lose
Key Takeaways
Oil prices moved higher at the end of the week after damage to key energy infrastructure in the Middle East and the continued disruption of the Strait of Hormuz. Now three weeks into the conflict, there are few signs of de-escalation. The Strait of Hormuz – a critical oil transit route between Iran and Oman – has been effectively shut for 19 days, disrupting nearly 20% of global oil supply.
Goldman Sachs warned that elevated prices could persist through 2027 in a prolonged disruption scenario, per CNN, as quoted on Yahoo Finance. Brent crude topped the mark of $110.2 per barrel.
Analysts at Goldman noted that past supply shocks show oil can remain above $100 for extended periods when disruptions are severe and long-lasting, as mentioned on the above-said source.
Escalation in Conflict Keeps Markets on Edge
The recent surge in oil prices follows escalating tensions in the region. An Israeli strike on Iran’s South Pars gas field triggered retaliation targeting Qatar’s Ras Laffan LNG facility – the largest of its kind globally – intensifying supply concerns.
Despite Israeli Prime Minister Benjamin Netanyahu indicating restraint following appeals from President Donald Trump, markets remain cautious amid ongoing hostilities.
Goldman’s Projections
Goldman Sachs warned that in extreme scenarios, Brent crude could surpass its 2008 record of about $147 per barrel if disruptions persist. In a worst-case outlook, prices could average around $111 per barrel by late 2027 if supply remains constrained even after partial reopening, as mentioned in the same CNN source.
In a more optimistic scenario, a gradual restoration of flows beginning in April could push prices down to the $70 range by the end of 2026, per the CNN article, as mentioned on Yahoo Finance.
Sector ETFs to Gain or Lose
If oil prices continue to gain in the medium term, the below-mentioned ETF areas are likely to gain and lose.
ETFs to Gain
Energy – United States Brent Oil Fund LP (BNO)
This is the most obvious choice. If oil price stages an uptrend, oil ETFs are sure to benefit. The ETF (BNO - Free Report) gained about 51% over the past month. Oil exploration ETFs like XOP will also likely to surge ahead. The ETF (XOP - Free Report) added about 15% during the same time frame.
Small-Caps – iShares Russell 2000 ETF (IWM)
Although the U.S. economic growth has slowed lately, the economy is still in decent shape. 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 1.4% over the past five days while (IWM - Free Report) is down by 0.6%.
ETFs to Lose
Retail -- SPDR S&P Retail ETF (XRT)
Rising energy prices do not bode well for retailers as consumers’ wallets get squeezed from higher outlays on gas stations. In fact, not only oil, overall inflation will be rising, hurting consumers’ buying power. Thus, SPDR S&P Retail ETF (XRT - Free Report) will lose in a rising oil price environment.
India -- iShares India 50 ETF (INDY)
India is almost entirely dependent on imports to back its oil needs. An oil price rise could thus be a major headwind to India investing, putting iShares India 50 ETF (INDY - Free Report) in focus. The fund has lost about 11.7% 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 - Free Report) is likely to underperform in the current situation. The JETS ETF has lost 16.2% over the past one month.
Gold Mining – VanEck Gold Miners ETF (GDX)
Gold mining is heavily dependent on fuel, with 15–20% of all-in operating costs (per goldmoney.com) directly tied to energy (diesel for heavy equipment, electricity). The same source also highlights that beyond the diesel and electricity required to extract and process the metal, energy is needed to ventilate and cool underground mines as well. So, a sharp oil rally, like the one currently underway, is a key negative for miners’ profitability. (GDX - Free Report) is down about 22% over the past one month (read: A Few Reasons Why Gold ETFs Failed to Surge Amid Iran War).