Crude Oil ETFs Rally on Middle East Tensions — But Will It Last?

Crude oil markets rebounded sharply last week as the outbreak of missile strikes between Israel and Iran sent shockwaves through global energy markets. With geopolitical tensions rising and supply security once again in focus, investors turned to oil-linked ETFs as a short-term hedge against volatility.

Middle East Conflict Sparks Price Spike

Oil prices surged more than 7% on Friday following Israel’s airstrikes on Iranian military facilities and Tehran’s retaliatory actions over the weekend. While Monday saw prices ease slightly, with West Texas Intermediate (WTI) stabilizing near $73 per barrel, markets remain on alert.

The Strait of Hormuz—responsible for roughly 20% of the world’s oil flows—remains fully operational, which has so far prevented panic in physical markets. Still, any credible threat to this critical chokepoint could trigger another rally. For now, while some oil infrastructures in both countries have been hit, supply disruptions remain minimal.

Market Repricing: Near-Term Volatility, Long-Term Uncertainty

Although tensions have revived oil’s geopolitical risk premium, the broader outlook for crude remains uncertain. Several analysts, including teams at JPMorgan and Goldman Sachs, continue to forecast lower oil prices by year-end, assuming no sustained supply shock.

Contributing to this neutral-to-bearish stance are factors such as slowing refinery throughput in China, weaker global demand forecasts, and sufficient spare capacity within OPEC+. Meanwhile, the U.S. shale sector continues to act as a price ceiling, with producers ready to increase output if prices rise substantially. 

This dynamic has led many traders to frame the current rally as a geopolitical repricing, rather than the start of a sustained bull run.

ETF Standouts: Crude Oil Funds Post Strong Weekly Gains

Investors seeking exposure to short-term oil price moves poured capital into oil-linked ETFs last week. Here are the top-performing crude oil ETFs as of June 16, 2025, based on weekly data:

• WisdomTree WTI Crude Oil - EUR Daily Hedged (ECRD)
  WTD Performance: +11.44%
• WisdomTree WTI Crude Oil ETC (CRUD)
  WTD Performance: +8.77%
• UBS CMCI Oil SF ETF - USD (OILUSA)
  WTD Performance: +6.18%
• iShares Oil & Gas Exploration & Production UCITS ETF (IOGP)
  WTD Performance: +5.86%

While these funds benefited from last week’s rally, their future performance will likely depend on how the Israel–Iran situation evolves and whether broader macroeconomic headwinds—such as inflation, trade tariffs, and interest rate policy—shift investor sentiment.

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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.