In the wake of the war in Iran, oil prices have been highly volatile. Investors looking to take advantage of higher oil prices, in either the short or long term, should consider turning to the best oil exchange-traded funds (“ETFs”), as they offer an easy, accessible way to invest here.
Higher oil prices often lead to increased profits for oil-producing companies across the industry, such as Exxon Mobil (XOM) and Chevron (CVX). But not all oil investments benefit equally, depending on how their business is positioned.
Oil producers may see gains immediately, since they’re able to sell their petroleum for more, helping profits rise faster. Other players, such as drillers and equipment companies, may benefit less immediately and somewhat more indirectly.
The key 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 range of stocks and reducing the risk that any single stock significantly impacts the portfolio. So, you get the best of both worlds.
Investors looking to play oil prices more directly, especially in the short term, can turn to ETFs that own oil futures contracts. They make it easier to access the higher leverage and potential return of futures without the downsides of directly owning futures contracts.
Here are seven top ETFs offering exposure to the oil market, along with their historical returns and fee comparisons.
7 Best Oil ETFs to Invest in for 2026
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.
| Fund (ticker) | One-year return | Five-year annualized return | Expense ratio |
| United States Oil Fund (USO) | 35.6% | 17.9% | 0.86% |
| Invesco DB Oil Fund (DBO) | 29.7% | 10.6% | 0.75% |
| State Street Energy Select Sector SPDR Fund (XLE) | 26.3% | 18.9% | 0.08% |
| Vanguard Energy Index Fund (VDE) | 26.7% | 18.9% | 0.09% |
| Fidelity MSCI Energy Index Fund (FENY) | 26.7% | 19.0% | 0.084% |
| VanEck Oil Services Fund (OIH) | 62.9% | 12.8% | 0.35% |
| State Street SPDR S&P Oil & Gas Equipment & Services Fund (XES) | 73.4% | 13.2% | 0.35% |
Source: Data from Morningstar, as of June 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
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.
Investing in this kind of fund is easier than trading oil futures yourself, though it does charge a high expense ratio for the privilege. Still, it gives you the advantages of futures while eliminating some of the drawbacks, such as the need to put up equity if the position moves against you.
Assets under management: $2.0 billion
Top holdings: Crude oil futures
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.
Like the prior fund, this Invesco fund makes it easier to play spot oil prices than using futures yourself. But the somewhat lower expense ratio doesn’t make up for the relatively lower performance, both over the past year and past five years.
Assets under management: $243.6 million
Top holdings: Crude oil futures
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. So, it includes a cross-section of the industry, including the largest names in the sector.
Of the broad-based equity funds noted here, this State Street ETF has the lowest expense ratio – by a nose – while its performance is largely in line with peers’, notably over the last five years.
Assets under management: $36.3 billion
Top holdings: Exxon Mobil, Chevron, ConocoPhillips (COP), Williams Companies (WMB), Valero Energy (VLO)
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. Its largest positions look much like those of other broad-based funds on this list, including oil-sector giants Exxon Mobil, Chevron, and ConocoPhillips.
This fund has delivered strong returns over the past year and five years, meaning its marginally higher expense ratio is still worth the cost.
Assets under management: $11.8 billion
Top holdings: Exxon Mobil, Chevron, ConocoPhillips, Williams Companies, SLB (SLB)
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. It owns the same top holdings as the other broad-based funds, including market leaders such as ExxonMobil, Chevron, and ConocoPhillips.
With similar one-year and five-year performance as other broad-based funds and a comparable expense ratio, you won’t go wrong choosing this fund in lieu of either of the others.
Assets under management: $1.8 billion
Top holdings: Exxon Mobil, Chevron, ConocoPhillips, Williams Companies, Marathon Petroleum (MPC)
6. VanEck Oil Services Fund (OIH)
This fund focuses on oil equipment, services, and drilling, providing exposure to this oil sub-sector rather than the broader industry. Its portfolio consists of more than 20 positions.
This more specialized fund has performed notably better than broad-based funds over the past year, but its five-year performance is notably worse, showing the cyclicality of this sub-sector.
Assets under management: $2.1 billion
Top holdings: SLB, Baker Hughes (BHI), Halliburton (HAL), TechnipFMC (FTI), Tenaris (TS)
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, with a different selection of top names, compared to the VanEck fund above.
This specialized fund has performed somewhat better than its comparable rival over the past one and five years, while still charging the same reasonable expense ratio,
Assets under management: $512.9 million
Top holdings: Solaris Energy Infrastructure (SEI), Kodiak Gas Services (KOD), Cactus (WHD), Archrock (AROC), Patterson-UTI Energy (PTEN)
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 respond 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 realize gains from higher oil prices over time by increasing production, giving investors two ways to win here.
- Equipment and services funds may rise further, depending on the specific dynamics of 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, PhD
Editor’s Note: This year, one of the world’s biggest oil producers poured $1 billion into a startup that could KILL the oil industry.
This obscure startup is the front-runner in a technology that could generate virtually limitless energy.
Bill Gates says that it “could be as transformative as the invention of the steam engine before the Industrial Revolution.” (Details here.)
No wonder Microsoft recently inked a massive deal to generate electricity from this breakthrough power source.
Even the firms that are most vulnerable to its disruptive potential are piling into it… Oil supermajors ExxonMobil, Chevron, Eni, and Shell are staking billions of dollars in a technology that – according to Live Science – could “make oil obsolete.”
And now – thanks to a little-known “backdoor” into this technology – it’s your turn.
