Best Oil ETFs: 7 Top Funds for Soaring Oil Prices

In the wake of the Iran war, oil prices have surged higher as the markets factor in the effects of supply disruptions to the global economy. Investors looking to take advantage of volatile oil prices should consider turning to the best oil exchange-traded funds (“ETFs”).

Higher oil prices often lead to increased profits for oil-producing companies up and down the industry. But not all oil investments benefit equally, depending on how their business is positioned.

Oil producers may benefit immediately, since they’re able to sell their petroleum for more, and their profits may rise faster than the price of oil itself. Other players, such as drillers and equipment companies, may benefit less immediately and somewhat more indirectly.

The question for investors is, what’s the best way to play volatile oil prices? Oil ETFs provide a convenient way to gain exposure to various sectors of the oil market, although investors do have other high-potential options for investing in oil.

ETFs let investors play the trend without having to pick individual stocks. They also offer the advantage of diversification, providing exposure to a wide variety of stocks and reducing the risk of any single stock significantly impacting the portfolio. So, you get the best of both worlds.

Here are seven top ETFs offering exposure to the oil market, their five-year returns, and the fees.

Best Oil ETFs: Overview of the Top Oil and Energy Funds

Oil ETFs track the various slices or sub-sectors of the industry, giving you exposure to distinct parts of the market:

• Oil: These funds use futures and options to gain synthetic exposure to oil prices. If oil rises or falls, then these funds will follow it, but they won’t follow prices tick for tick.

• Broad-based: These funds include exploration and production companies, which offer strong upside to rising oil prices, as well as equipment and services companies.

• Energy equipment and services: These funds include drillers and other firms providing the equipment and services that keep oil flowing.

These areas may each respond differently to oil prices, depending on their specific dynamics, as you can see in the five-year returns below.

Source: Data from Morningstar, as of March 23, 2026

How MarketWise Selected These Funds

MarketWise chose its best oil funds based on the following criteria:

• Funds with exposure to oil and gas

• Strong long-term record of returns

• A low expense ratio

• No leveraged or inverse funds

Top Oil ETFs: In Detail

1. United States Oil Fund (USO)

This fund tracks the price of oil using futures contracts. So, if oil futures move higher, the fund should rise, too. However, because it uses futures, it will track the spot price of oil imperfectly over time.

2. Invesco DB Oil Fund (DBO)

This ETF also tracks oil prices using futures contracts, meaning it will reflect rising or falling oil futures prices. The use of futures contracts means it won’t track the spot price of oil exactly, though.

3. State Street Energy Select Sector SPDR Fund (XLE)

This fund offers broad-based exposure to the oil industry, including exploration companies as well as equipment and services companies. The fund holds more than 20 positions, and its largest stakes include ExxonMobil (XOM), Chevron (CVX), and ConocoPhillips (COP).

SEE MORE: Our oil and defense stock trades soar in response to strikes on Iran. How to trade the next move.

4. Vanguard Energy Index Fund (VDE)

This low-cost Vanguard fund offers broad exposure to the energy field, with more than 100 stock positions in its portfolio. The fund’s largest holdings include the giants ExxonMobil, Chevron, and ConocoPhillips.

5. Fidelity MSCI Energy Index Fund (FENY)

This low-cost Fidelity ETF also offers a broad-based investment in the oil industry, with around 100 positions in its portfolio. Its top holdings include market leaders such as ExxonMobil, Chevron, and ConocoPhillips.

6. VanEck Oil Services Fund (OIH)

This fund focuses on oil equipment, services, and drilling, providing exposure to this oil sub-sector. Its portfolio consists of more than 20 positions, with top holdings including SLB (SLB), Baker Hughes (BKR), and Halliburton (HAL).

7. State Street SPDR S&P Oil & Gas Equipment & Services Fund (XES)

This fund offers narrow exposure to companies focused on oil equipment, services, and drilling. The ETF has more than 30 positions, and its top names include Solaris Energy Infrastructure (SEI), Patterson-UTI Energy (PTEN), and Helmerich & Payne (HP).

Best Ways to Invest in Oil

ETFs are a great way to play the volatility in oil prices since they offer easy access to a portion of the market: oil itself, producers, and equipment and service companies.

But what’s the best way to invest in oil? That depends on your expectations.

• Oil funds provide exposure to the commodity itself, so they’re going to respond to short-term moves in oil prices. While the fund may not track spot prices closely, both are going to move in the same direction for the same reasons in the short term.

• Broad-based funds with significant exposure to oil-producing companies typically responds well to oil prices. Oil producers tend to benefit from rising oil prices because their profits actually increase faster than the price of oil itself. In addition, producers can see gains from higher oil prices over time by raising their production, giving investors two ways to win here. Legendary investor Warren Buffett’s Berkshire Hathaway has two huge positions in oil, investing in companies rather than the commodity itself.

• Equipment and services funds may rise more, according to the specific dynamics in those sub-sectors. For example, drilling revenue may rise in response to higher oil prices, but the effect may be more muted and indirect in the short term. However, sustained higher oil prices may help drillers charge higher rates for their services in the future.

So, investors can select the kind of exposure they’re expecting from the oil market, while doing so quickly and conveniently with a targeted ETF.

Regards,

James Royal

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