Oil prices jumped more than 4% on Feb. 18, 2026 after U.S. Vice President JD Vance said Iran failed to meet key American demands during recent nuclear negotiations and warned that military action remains an option if diplomacy breaks down, as quoted on CNBC. United States Oil Fund, LP USO added 4.9% on Feb. 18 while the fund gained 0.8% after hours.
Rising Geopolitical Tensions Add Supply Concerns
U.S. envoys Steve Witkoff and Jared Kushner held talks with Iranian officials in Geneva. Iran’s foreign minister Abbas Araghchi described the discussions as constructive. Oil prices had fallen earlier after markets interpreted these comments as a sign that negotiations could succeed.
However, sentiment reversed after Vance said Tehran had not addressed core U.S. “red lines,” as mentioned in the same CNBC article. Meanwhile, Iran conducted military exercises in the Strait of Hormuz — a critical route for global energy shipments — raising fears that oil flows could be disrupted in the event of conflict.
Note that about one-third of all waterborne crude exports pass through this narrow waterway, according to data from energy consulting firm Kpler, as quoted on CNBC. The United States too has strengthened its military presence in the Middle East by deploying aircraft carriers, signaling readiness if negotiations collapse.
Escalating tensions could threaten supply of oil through key shipping routes. If oil prices gain in the near term, the below-mentioned ETF areas are likely to gain and lose.
ETFs to Gain
Energy – SPDR S&P Oil & Gas Exploration & Production ETF XOP
This is the most obvious choice. If oil price is staging an uptrend on reduced supplies, oil exploration and production stocks are sure to benefit as these companies will tend to pump more oil ahead.
Norway – iShares MSCI Norway ETF ENOR
Norway is among the top 10 nations famous for oil exports and with its comparatively low population, oil forms the key part of the country’s GDP. Per U.S. Norway is one of the largest oil producers and exporters in Western Europe.
ETFs to Lose
Retail
Rising energy prices do not bode well for retailers as consumers’ wallets get squeezed from higher outlays on gas stations. In fact, not only oil, overall inflation will be rising, hurting consumers’ buying power. Thus, SPDR S&P Retail ETF XRT will lose in a rising oil price environment.
India
India is almost entirely dependent on imports to back its oil needs. An oil price rise could thus be a major headwind to India investing, putting iShares India 50 ETF INDY in focus.
Airlines
The airline sector performs better in a falling crude scenario, as energy costs form a major portion of the overall cost of this sector. Hence, airlines ETF U.S. Global Jets ETF JETS is likely to underperform in the current situation.
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United States Oil ETF (USO): ETF Research Reports State Street SPDR S&P Retail ETF (XRT): ETF Research Reports State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP): ETF Research Reports iShares India 50 ETF (INDY): ETF Research Reports U.S. Global Jets ETF (JETS): ETF Research Reports iShares MSCI Norway ETF (ENOR): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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