The United States Oil Fund LP (USO) surged 6.38% in pre-market trading on Monday, mirroring a sharp jump in underlying crude oil prices. The move followed a weekend of escalating geopolitical tensions in the Middle East that threatened to severely disrupt global energy supplies.
The price surge was triggered by the collapse of peace talks between the United States and Iran. In response, U.S. President Donald Trump announced a naval blockade of the Strait of Hormuz, a critical waterway for approximately 20% of the world's seaborne oil trade. The U.S. Central Command stated the blockade against vessels entering or departing Iranian ports would begin Monday, heightening fears of a prolonged supply shock.
Analysts noted the failed diplomatic efforts forced markets to reassess the geopolitical risk premium in oil prices. West Texas Intermediate crude futures jumped over 8% to above $104 a barrel, with the international benchmark Brent crude surpassing $103. As an exchange-traded fund that tracks the daily price movements of West Texas Intermediate light, sweet crude oil, USO's net asset value is directly linked to these rising crude benchmarks, explaining its significant pre-market gain.