The global oil market is grappling with escalating geopolitical tensions after U.S. airstrikes targeted three of Iran’s primary nuclear facilities — Fordow, Natanz, and Isfahan. The development matched market watchers’ anticipation and has left traders bracing for a likely surge in oil prices.
Note that United States Oil Fund LP USO and United States Brent Oil Fund LP BNO added 23.8% and 21.6% over the past one month (as of Jun 20, 2025). The region at the center of these tensions makes up for about one-third of the world’s oil supply.
Energy Analysts Warn of $100 Oil
Market watchers are now focused on Iran’s likely response. According to Saul Kavonic of MST Marquee, retaliation could lead to a significant escalation, possibly involving attacks on U.S. assets in the Gulf or threats to shipping lanes like the Strait of Hormuz, as quoted on Bloomberg.
The Strait of Hormuz, a key passage for oil exports from Iran, Saudi Arabia, Iraq, and other major OPEC producers, remains a key concern.
Uncertainty Over Trump’s Long-Term Strategy
The Trump administration's intentions remain the major question here. After initially signaling indecision last Thursday, President Trump ordered the strikes early Sunday, calling the targets "obliterated" and warning Iran of further action unless it agrees to make peace with Israel, as quoted on Bloomberg.
Against this backdrop, below-mentioned sector exchange-traded funds (ETFs) should win and lose if oil prices rally on Iran tensions.
Winners
Energy – SPDR S&P Oil & Gas Exploration & Production ETF XOP
This is the most obvious choice. If oil price is staging an uptrend, oil exploration and production stocks are sure to gain as these companies will tend to pump more oil ahead.
Steel – VanEck Vectors Steel ETF SLX
Steel producers are likely to gain if oil prices continue to rally. The industry supplies materials to build and expand oil drilling operations.
Losers
Retail - SPDR S&P Retail ETF XRT
Rising energy prices may weigh on retailers as consumers’ wallets get squeezed from higher outlays on gas station. This is going to hurt consumers directly.
Oil Refiners – VanEck Vectors Oil Refiners ETF CRAK
Companies in the refining segment are likely to underperform from higher 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 gaining, refiners may see a lower crack spread and their profitability may be hurt.
Airlines - U.S. Global Jets ETF JETS
The airline sector also performs worse in a rising crude scenario. This is especially true as energy costs form a major portion of the overall costs of this sector. So, higher crude prices are likely to hit earnings of airline companies hard.
Gold Miners – VanEck Vectors Gold Miners ETF GDX
Higher oil prices are a negative for miners. Mining companies’ 50% production costs are closely linked to energy prices. Pricey oil may go against gold miners’ operating margins.
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United States Oil ETF (USO): ETF Research Reports SPDR S&P Retail ETF (XRT): ETF Research Reports VanEck Steel ETF (SLX): ETF Research Reports VanEck Gold Miners ETF (GDX): ETF Research Reports United States Brent Oil ETF (BNO): ETF Research Reports SPDR S&P Oil & Gas Exploration & Production ETF (XOP): ETF Research Reports U.S. Global Jets ETF (JETS): ETF Research Reports VanEck Oil Refiners ETF (CRAK): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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