ETF Areas to Win/Lose Amid Middle East Tensions

Oil futures jumped sharply following an escalating Middle East conflict that is now threatening global energy infrastructure. Futures tied to Brent crude, the international benchmark, surged to above $82 per barrel. Meanwhile, US benchmark West Texas Intermediate (WTI) crude crossed the $70-per-barrel mark.

Brent prices reached levels not seen since January 2025, while WTI touched highs last recorded during the 2025 “12-day war,” as quoted on Yahoo Finance.

Military Escalation Drives the Oil Rally

The price surge followed a dramatic escalation in hostilities beginning early Saturday, when the United States and Israel launched extensive air strikes across Iran. President Donald Trump described the operation as an effort to dismantle Iran’s nuclear program and remove the current regime, as quoted on Yahoo Finance.

According to statements posted on Truth Social, Iranian Supreme Leader Ali Khamenei was killed during the strikes. Iran responded quickly, launching missiles targeting U.S. military assets as well as civilian and energy infrastructure across Gulf states including Bahrain and the United Arab Emirates, according to regional media reports, as quoted on Yahoo Finance.

Strait of Hormuz Disruptions Raise Supply Risks

Energy markets are particularly focused on developments in the Strait of Hormuz, one of the world’s most critical oil shipping chokepoints. Roughly one-fifth of global oil supply moves through the passage each day.

Data from Kpler shows that about 15 million barrels per day of crude and condensate typically transit the Strait. Analysts estimate regional pipelines could reroute only 5–7 million barrels daily if shipments are disrupted, leaving around 8 million barrels per day stranded, as quoted on Yahoo Finance.

According to Reuters, Iran’s Islamic Revolutionary Guard Corps warned ships via radio communications that no vessels were permitted to pass through the Strait, as quoted on Yahoo Finance.

Sector ETFs to Gain or Lose

If oil prices continue to gain in the near term, the below-mentioned ETF areas are likely to gain and lose.

ETFs to Gain

Energy – United States Brent Oil Fund LP (BNO)

This is the most obvious choice. If oil price stages an uptrend, oil ETFs are sure to benefit. During a scheduled meeting on Sunday, the OPEC+ alliance raised production quotas by 220,000 barrels per day, exceeding expectations for a 137,000-barrel increase. Analysts expect the move unlikely to offset geopolitical risks (per the above-said Yahoo Finance article) and see the move as only a slight respite.

According to consultancy Wood Mackenzie, oil prices could climb above $100 per barrel if tanker flows are not restored quickly, as quoted on the same Yahoo article. The ETF BNO gained about 6.6% before market on Mar. 2, 2026. Oil exploration ETFs like XOP will also likely to surge ahead. The ETF XOP added about 5% before market, at the time of writing.

Shipping – SonicShares Global Shipping ETF BOAT

Many vessel owners are choosing not to transit the Strait rather than accept economically unworkable conditions like taking longer routes. Freight rates are thus likely to rise in this condition. Shipping ETF BOAT surged about 5% pre-market at the time of writing.

Gold – SPDR Gold Shares GLD

Gold is viewed as a safe haven asset and hence started to stage a rally amid Iran-induced Middle East tensions. The fund GLD added about 2.2% before market.

Defense – iShares U.S. Aerospace & Defense ETF ITA

Defense stocks and ETFs remain in a sweet spot during any kind of warfare. The fund ITA added 3.5% before market on Mar. 2, 2026, at the time of writing.

ETFs to Lose

Oil Refiners – VanEck Oil Refiners ETF CRAK

Companies in the refining segment benefit from lower oil prices as crude is one of their main input costs. After taking crude, refiners transform it to the finished product — gasoline. Now with crude prices rising, refiners may see a lower crack spread and their profitability may be hurt. CRAK lost about 1.6% before market on Mar. 2, 2026, at the time of writing.

Retail -- SPDR S&P Retail ETF XRT

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 -- iShares India 50 ETF INDY

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 -- U.S. Global Jets ETF JETS

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. The JETS ETF lost 3.3% before market.

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This article originally published on Zacks Investment Research (zacks.com).

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