To The Moon

During trading on March 13, Brent crude reached $100 per barrel while WTI climbed above $95, both hitting their highest levels since August 2022.

From the start of the year to date, oil-related ETFs have posted strong gains. The 2x leveraged WTI crude oil ETF $二倍做多彭博原油ETF(UCO)$ has risen 106.37%, the strongest performer in the group. $美国原油ETF(USO)$ , which tracks WTI crude oil futures, has gained 71.18%. The 2x leveraged oil and gas exploration and production ETF $Direxion Daily S&P Oil &Gas Exp. & Prod. Bull 2X Shares(GUSH)$ is up 69.95%, while $美国布伦特原油基金有限合伙企业(BNO)$ , which tracks Brent crude oil futures, has gained 70.37%. Among traditional energy equity ETFs, $油气开采指数ETF-SPDR S&P(XOP)$ has risen 32.04%, $SPDR能源指数ETF(XLE)$ is up 28.63%, and $Vanguard Energy ETF(VDE)$ has gained 28.77%.

The rally began on February 28, when the United States and Israel launched airstrikes on targets inside Iran, sharply escalating tensions in the Middle East. Over the following two weeks, missile attacks and airstrikes expanded, and the market quickly began pricing in a geopolitical risk premium.

The situation intensified around the Strait of Hormuz. On March 13, Iran’s new Supreme Leader Mojtaba Khamenei stated publicly that Iran would ensure the continued closure of the Strait of Hormuz. This narrow waterway carries roughly 20% of global oil shipments and is one of the most critical energy transport routes in the world.

The risk soon moved from political rhetoric to real-world events. On March 12, the UK warned that Iran may have begun deploying naval mines in the Strait of Hormuz. At the same time, three commercial ships were attacked in the Arabian Gulf, prompting shipping companies to reduce transit through the region.

Supply disruptions have also started to emerge. On March 13, the International Energy Agency stated that the conflict had created one of the largest supply shocks in the history of the global oil market. Approximately 7.5% of global oil production has been affected, forcing several Middle Eastern producers to adjust export routes.

Governments have attempted to stabilize the market. On March 12, IEA member countries agreed to release 400 million barrels of strategic petroleum reserves, the largest coordinated release in history. Despite this move, oil prices have remained elevated and continue to fluctuate around the $100 level.

The United States has also attempted to increase supply. On March 13, the US Treasury allowed buyers to receive Russian crude oil cargoes that were already in transit in an effort to ease supply pressure. However, the measure only applies to shipments that had already been loaded, limiting its short-term impact.

Market dynamics have further amplified the volatility. This week, WTI crude traded within a range of roughly $43 per barrel, the widest weekly range since the pandemic. Rapid flows in options markets and energy ETFs have contributed to sharp short-term price swings.

For now, many market participants believe oil prices will remain volatile until risks around the Strait of Hormuz are resolved. Several institutions currently estimate a short-term trading range of $85 to $105 per barrel, with future price direction largely dependent on how the Middle East situation evolves. Do you think this is still a good time to enter the trade? Share your view in the comments. The best comments will receive Tiger Coins.

Related ETF Overview:

$SPDR能源指数ETF(XLE)$ is one of the largest energy equity ETFs with total assets of about $40.2 billion and an expense ratio of 0.03%. The fund mainly holds major integrated oil companies such as Exxon Mobil and Chevron, making it a common vehicle for exposure to US energy giants.

$Vanguard Energy ETF(VDE)$ manages about $9.9 billion in assets and charges an expense ratio of 0.08%. It tracks the CRSP US Energy Index and holds a broad range of companies across exploration, oil services, and integrated energy.

$油气开采指数ETF-SPDR S&P(XOP)$ has roughly $3.1 billion in assets and an expense ratio of 0.35%. The fund uses an equal-weight methodology for US exploration and production companies, giving it greater exposure to smaller energy firms and higher sensitivity to oil prices.

$美国原油ETF(USO)$ manages about $2.65 billion in assets with an expense ratio of 0.45%. The fund tracks WTI crude oil futures and is one of the most commonly used ETFs for investors seeking direct exposure to oil price movements.

$美国布伦特原油基金有限合伙企业(BNO)$ manages about $466 million in assets and charges an expense ratio of 0.75%. It tracks Brent crude oil futures, which better reflect pricing dynamics in the Middle East and European oil markets.

$二倍做多彭博原油ETF(UCO)$ manages approximately $632 million in assets and has an expense ratio of 0.95%. It is a 2x leveraged ETF designed to deliver roughly twice the daily return of WTI crude oil futures.

$Direxion Daily S&P Oil &Gas Exp. & Prod. Bull 2X Shares(GUSH)$ manages about $391 million in assets with an expense ratio of 0.75%. It is a 2x leveraged ETF tracking US oil and gas exploration and production companies, typically exhibiting higher volatility during oil price upcycles.