Oil ETFs Surge on Iran-Israel Conflict: Top Canadian Funds to Watch
Crude oil ETFs surged 8.5% as Middle East tensions spiked prices – discover which Canadian energy funds outperformed and whether the rally can last.
Oil Prices Rebound on Geopolitical Escalation
Crude oil markets spiked sharply last week after direct missile strikes between Israel and Iran raised fears of a broader regional war. West Texas Intermediate (WTI) futures jumped more than 7% on Friday—their biggest single-day move since 2022—before pulling back slightly to trade near $73 on Monday, June 16.
Though tensions remain high, global supply has not yet been disrupted. The Strait of Hormuz, a strategic waterway through which 20% of the world’s oil flows, continues to operate normally. Even if both countries' oil infrastructures have been targeted over the weekend, the crisis seems to stay confined to financial markets rather than physical shortages.
Short-Term Shock, Long-Term Uncertainty
The spike in oil prices is being driven more by perceived risk than actual supply disruption. Analysts from JPMorgan, Goldman Sachs, and other institutions warn that unless the conflict escalates meaningfully, crude prices may settle back into pre-crisis ranges.
Several headwinds remain for oil’s longer-term outlook:
- China’s refinery output dipped in May, hinting at weaker global demand.
- OPEC+ spare capacity remains sufficient to offset modest disruptions.
- U.S. shale producers stand ready to ramp up supply if prices spike further.
Many analysts still expect oil to trade below $60 by the end of 2025, barring a direct hit to Gulf oil flows. The current rally, they argue, is more about risk repricing than a structural bull market.
Canadian Crude Oil ETFs in Focus
Canadian energy and crude oil ETFs have delivered standout weekly performances as investors positioned for further volatility. Here’s how the top funds stacked up last week:
- Global X Crude Oil ETF (HUC) was the top crude-specific performer, gaining +8.49% week-to-date. The fund offers direct exposure to WTI futures and is a go-to for tactical oil plays.
- The iShares S&P/TSX Capped Energy Index ETF (XEG) added +7.85%, despite facing $168 million in weekly outflows. It remains one of the most liquid energy ETFs in Canada, holding names like Suncor and Cenovus.
- Ninepoint Energy Income Fund (NRGI) posted a solid +6.47% weekly return, though it remains modestly up on the year.
- Ninepoint’s NRGY ETF and BMO Equal Weight Oil & Gas ETF (ZEO) delivered respective gains of +4.14% and +4.13%, riding the broad rally in Canadian oil and gas equities.
- The Ninepoint Energy Fund (NNRG.U) added +4.53%, continuing its strong YTD performance of +8.89%, despite sustained redemptions.
Together, these results show that Canadian crude oil ETFs are particularly responsive to global conflict scenarios and can serve as powerful short-term tools for investors seeking to express views on energy volatility.
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Please note this article is for information purposes only and does not in any way constitute investment advice. It is essential that you seek advice from a registered financial professional prior to making any investment decision.
