Sector ETFs to Benefit from U.S.-Iran Unrest

The United States and Israel launched coordinated strikes on Iran on Feb. 28, 2026, with President Donald Trump saying the operation aimed to destroy Iran’s nuclear program and weaken the current regime.

The attacks prompted immediate retaliation from Iran and raised fears of a broader regional conflict with significant implications for global oil markets. Early reports from Reuters, Axios, and CNN, citing U.S. government sources, said Iran’s Supreme Leader Ayatollah Ali Khamenei was killed in the strikes, though details remain limited, as quoted on Yahoo Finance.

Retaliation Expands Across the Gulf

Iran responded quickly, launching missiles toward U.S. military assets and infrastructure across the Gulf region, including locations in Bahrain, the United Arab Emirates and Qatar. Reports also indicated strikes targeting facilities linked to Saudi Arabia. The escalation followed failed last-minute nuclear negotiations mediated by Oman.

Oil Markets Brace for Sharp Volatility

Iran produces roughly 3.4 million barrels per day, making up about 4% of the world's oil supply, and exports roughly 1 million to 2 million barrels per day, according to Kpler, with most of those sanctioned shipments going to China, as quoted on Yahoo Finance.

Oil prices had already risen ahead of the escalation. According to Rystad Energy’s Jorge León warns prices could jump $10–$20 per barrel when markets reopen if tensions show no signs of easing, as quoted on Yahoo Finance.

Strait of Hormuz Risks Dominate Outlook

Market attention has shifted to the Strait of Hormuz, a vital chokepoint through which roughly one-fifth of global oil and liquefied natural gas supplies pass daily. Iranian forces reportedly warned vessels against transiting the strait, as mentioned in the above-said Yahoo Finance article.

Although a full closure is viewed as unlikely, any disruption could shoot up shipping costs and energy prices.

ETFs to Benefit

Against this backdrop, below we highlight a few exchange-traded fund (ETF) areas that could gain ahead.

Energy – United States Brent Oil Fund LP BNO

Oil prices have risen sharply in recent times due to this tension. The fund is up 11.3% over the past month (as of Feb. 27, 2026). The recent spike in geopolitics is a plus for oil prices and energy stocks as the conflict involves the Strait of Hormuz.

Defense – iShares US Aerospace & Defense ETF ITA

Defense stocks should be surging following the U.S. move to topple Iran’s current regime. The sector had already performed strongly last year due to rising defense spending amid escalating geopolitical tensions.

Geopolitical conflicts often lead to increased military spending and defense readiness. Companies in these ETFs – such as those producing weapons, surveillance systems, or military technology – stand to benefit from rising demand. As a result, defense ETFs like ITA come across as a strategic hedge (read: Why Defense Stocks & ETFs Can Continue to Soar).

Artificial Intelligence – Global X Robotics & Artificial Intelligence ETF BOTZ

AI is now central to military strategy, giving defense entities a strategic edge amid global tensions, enabling real-time processing of data from sensors and drones, and supporting precise threat detection.

Cybersecurity – ETFMG Prime Cyber Security ETF HACK

Modern warfare includes cyber threats, increasing demand for digital security. During periods of heightened tension, governments and corporations may face elevated risks of cyberattacks targeting critical infrastructure, defense systems, financial institutions, and communication networks.

Shipping – Breakwave Tanker Shipping ETF BWET

The fund offers exposure to crude oil tanker shipping. The underlying Breakwave Tanker Futures Index follows the near-dated futures market on a constant rolling basis. Global shipping stocks rose lately due to sharply increased freight rates caused by ongoing disruptions in major trade routes – particularly the Red Sea – which forced vessels to take longer journeys. Amid ongoing tensions, freight rates may go even higher.

Gold Mining – Themes Gold Miners ETF AUMI

Safe-haven demand should also spike amid rising tensions in the Middle East. Since mining stocks often act as a leveraged play of the underlying metal, AUMI should gain more.

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

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