Hormuz Tensions Deepen: Energy ETFs in Focus

The plan has raised legal questions. Under the United Nations Convention on the Law of the Sea, international waterways such as the Strait of Hormuz cannot normally be subject to tolls. Since the United States is not a party to the convention, it remains unclear how the proposed cargo fees would be implemented or enforced.

The latest announcement comes amid growing military tensions between the United States and Iran. 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.

As tensions have increased, shipping activity through the Strait of Hormuz has fallen significantly. Recent data shows that vessel traffic has dropped more than 52% from the previous week (as of July 14, 2026), per Yahoo Finance. Many ships are also adopting defensive measures, including switching off tracking systems during parts of their journeys to reduce security risks.

What Are the Ongoing Speculations?

Although oil prices have risen significantly, they remain below the levels seen during the early stages of the conflict, when crude prices exceeded $100 per barrel. Nevertheless, analysts warn that if military tensions continue to escalate or shipping through the Strait of Hormuz is disrupted further, oil prices could climb much higher, per Yahoo Finance.

The outlook for the oil market has also changed as global oil inventories have declined after several months of conflict. At the same time, China, the world's largest importer of crude oil, has begun increasing its purchases again. Stronger demand combined with tighter supplies could place additional upward pressure on oil prices in the coming months.

Impacts On ETFs as a Whole

The renewed conflict in the Middle East triggered a shift in investor sentiment. Simultaneously, soaring oil prices propelled energy stocks and related ETFs as investors expected global oil supplies to tighten.

ETFs to Gain

With rising oil prices, the biggest beneficiaries in the U.S. ETF market are energy sector ETFs, particularly those with large holdings in oil exploration, production and oilfield services companies. Higher crude prices generally translate into higher revenues, wider profit margins and stronger cash flows for these firms.

Likewise, if the conflict eventually subdues, oil prices will fall rapidly, indicating volatility and risks.

United States Oil Fund LP USO is one of the most widely traded oil ETFs in the world. It provides investors with exposure to West Texas Intermediate (WTI) crude oil prices without having to trade oil futures directly, with assets under management worth $ 2.16 billion. It has an expense ratio of 0.60% and trades with an average volume of 8,800,000 shares.

Energy Select Sector SPDR Fund XLE tracks the Energy Select Sector Index of the S&P 500 and invests primarily in leading U.S. oil and gas companies involved in oil exploration, production, refining and marketing, and integrated energy operations, with $37,404.1 million in assets under management and a 0.08% expense ratio. The fund trades at an average volume of 37,000,000 shares.

iShares U.S. Oil & Gas Exploration & Production IEO offers one of the purest plays on rising oil prices because it is concentrated in exploration and production companies whose earnings are closely linked to crude prices. The fund has assets under management of $541 million, with an expense ratio of 0.38% and an average trading volume of 85,000 shares.

VanEck Oil Services ETF OIH is a specialized energy ETF that invests in oilfield services and equipment companies rather than oil producers, providing exposure to the companies that supply the equipment, technology, drilling rigs and engineering services needed to extract oil and gas.

It has assets under management worth $2,006.80 million, along with an expense ratio of 0.35%. The fund trades an average volume of 400,000 shares.

Invesco DB Oil Fund DBO seeks to track the performance of WTI crude oil futures, making its returns closely tied to movements in oil prices.

It has assets under management of $241.5 million, with an expense ratio of 0.77%. The fund has an average trading volume of 757,790 shares.

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