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Oil surged in Q1 as Middle East tensions disrupted supply chains globally.
Strait risks plus war destruction are likely to keep oil elevated even if flows normalize gradually.
High-yield energy ETFs like XLEI and AMZA offer strong income amid tight supply outlook.
Energy markets had an amazing Q1 due to supply disruptions. Oil prices jumped by roughly 77% in the quarter. The Brent crude-based exchange-traded product (ETF) skyrocketed by about 84% in Q1. The conflict involving the United States, Israel, and Iran has disrupted the oil-rich Middle East. Tehran’s near-total closure of the Strait of Hormuz – a key waterway for global energy transit – in Q1 severely restricted global energy flows.
The second quarter of 2026 also kicked off on a shaky note, with the Iran war grabbing major headlines. While optimism around ongoing diplomatic progress between Washington and Tehran has supported a risk-on rally lately, volatility lingers. Policymakers say the biggest risk is how long the conflict lasts.
Meanwhile, Iran has shut the Strait of Hormuz again, citing unmet U.S. obligations after briefly reopening it Friday. President Donald Trump said that the U.S. blockade on Iranian ports will continue. U.K. maritime authorities reported that Iranian forces fired on three tankers in the area, as quoted on CNBC.
Even if the strait reopens and vessel traffic gradually returns to near pre-conflict levels, it is unlikely to deliver full relief, as damage to critical infrastructure across the Middle East continues to weigh on supply. As a result, oil prices are less likely to return to the pre-war levels even in the event of a more durable resolution (read: Risks Aren't Fading in the Energy Markets: ETFs to Gain).
Nations are rapidly boosting investments in solar, wind, and battery storage to avoid high energy prices and supply shocks. As a result, energy ETFs are likely to stay strong in the near term.
Energy ETFs to Win
State Street Energy Select Sector SPDR Premium Income ETF (XLEI - Free Report) – Up 5.5% YTD; Yield: 14.39%
The State Street Energy Select Sector SPDR Premium Income ETF employs an actively managed strategy that is designed to provide potential for current income while maintaining the prospects for long-term growth of capital. The fund charges 35 bps in fees.
Westwood Salient Enhanced Energy Income ETF (WEEI - Free Report) – Up 5.3% YTD; Yield: 11.77%
The Westwood Salient Enhanced Energy Income ETF is an actively-managed ETF that seeks to provide current income and capital appreciation by investing in securities of North American energy companies primarily involved in the following industries: oil, gas and consumable fuels as well as energy equipment and services. The fund charges 85 bps in fees.
Westwood Salient Enhanced Midstream Income ETF (MDST - Free Report) – Up 4.7% YTD; Yield: 9.66%
The Westwood Salient Enhanced Midstream Income ETF seeks to provide current income and capital appreciation. The fund charges 80 bps in fees.
The InfraCap MLP ETF seeks total return primarily through investments in equity securities of publicly-traded master limited partnerships and limited liability companies taxed as partnerships. The fund charges 172 bps in fees.
FT Energy Income Partners Enhanced Income ETF (EIPI - Free Report) – Up 9.9% YTD; Yield: 6.8%
The FT Energy Income Partners Enhanced Income ETF seeks a high level of total return with an emphasis on current distributions paid to shareholders. The fund charges 111 bps in fees.
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Buy 5 Energy ETFs With At Least 5% Yield
Key Takeaways
Energy markets had an amazing Q1 due to supply disruptions. Oil prices jumped by roughly 77% in the quarter. The Brent crude-based exchange-traded product (ETF) skyrocketed by about 84% in Q1. The conflict involving the United States, Israel, and Iran has disrupted the oil-rich Middle East. Tehran’s near-total closure of the Strait of Hormuz – a key waterway for global energy transit – in Q1 severely restricted global energy flows.
The second quarter of 2026 also kicked off on a shaky note, with the Iran war grabbing major headlines. While optimism around ongoing diplomatic progress between Washington and Tehran has supported a risk-on rally lately, volatility lingers. Policymakers say the biggest risk is how long the conflict lasts.
Meanwhile, Iran has shut the Strait of Hormuz again, citing unmet U.S. obligations after briefly reopening it Friday. President Donald Trump said that the U.S. blockade on Iranian ports will continue. U.K. maritime authorities reported that Iranian forces fired on three tankers in the area, as quoted on CNBC.
Even if the strait reopens and vessel traffic gradually returns to near pre-conflict levels, it is unlikely to deliver full relief, as damage to critical infrastructure across the Middle East continues to weigh on supply. As a result, oil prices are less likely to return to the pre-war levels even in the event of a more durable resolution (read: Risks Aren't Fading in the Energy Markets: ETFs to Gain).
Energy Security in Focus
Global leaders warn of a potential global energy crunch if supply routes are disrupted, as quoted on CNBC. Beyond oil, key materials like fertilizers and petrochemicals are at risk. The ongoing Iran war is emerging as a catalyst for an energy shift (read: Iran War Seen as Reason for Shift to Renewable Energy: ETFs in Focus).
Nations are rapidly boosting investments in solar, wind, and battery storage to avoid high energy prices and supply shocks. As a result, energy ETFs are likely to stay strong in the near term.
Energy ETFs to Win
State Street Energy Select Sector SPDR Premium Income ETF (XLEI - Free Report) – Up 5.5% YTD; Yield: 14.39%
The State Street Energy Select Sector SPDR Premium Income ETF employs an actively managed strategy that is designed to provide potential for current income while maintaining the prospects for long-term growth of capital. The fund charges 35 bps in fees.
Westwood Salient Enhanced Energy Income ETF (WEEI - Free Report) – Up 5.3% YTD; Yield: 11.77%
The Westwood Salient Enhanced Energy Income ETF is an actively-managed ETF that seeks to provide current income and capital appreciation by investing in securities of North American energy companies primarily involved in the following industries: oil, gas and consumable fuels as well as energy equipment and services. The fund charges 85 bps in fees.
Westwood Salient Enhanced Midstream Income ETF (MDST - Free Report) – Up 4.7% YTD; Yield: 9.66%
The Westwood Salient Enhanced Midstream Income ETF seeks to provide current income and capital appreciation. The fund charges 80 bps in fees.
InfraCap MLP ETF (AMZA - Free Report) – Up 9.9% YTD; Yield: 8.20%
The InfraCap MLP ETF seeks total return primarily through investments in equity securities of publicly-traded master limited partnerships and limited liability companies taxed as partnerships. The fund charges 172 bps in fees.
FT Energy Income Partners Enhanced Income ETF (EIPI - Free Report) – Up 9.9% YTD; Yield: 6.8%
The FT Energy Income Partners Enhanced Income ETF seeks a high level of total return with an emphasis on current distributions paid to shareholders. The fund charges 111 bps in fees.