US Oil Prices Surge Above $85 Amid Ongoing Hormuz Tensions

The energy sector is performing well this year, up about 40% year-to-date, with US crude prices climbing above $85 a barrel. This increase is attributed to the ongoing U.S.-Iran war, which has disrupted oil logistics in the Strait of Hormuz.

The SPDR S&P Oil & Gas Exploration & Production ETF (XOP), United States Oil Fund (USO), and VanEck Oil Services ETF (OIH) are among the energy-related exchange-traded funds (ETFs) that have been performing well. These funds offer investors a way to participate in the oil price rally.

Notably, two years ago, then-candidate Donald Trump asked oil executives to contribute $1 billion to his presidential campaign, promising policies that would boost the industry's profits. The executives included leaders from Exxon Mobil (XOM), Chevron (CVX), ConocoPhillips (COP), Continental Resources, EQT (EQT), Cheniere Energy (LNG), and the American Petroleum Institute.

The current oil price surge has benefited these companies, with the eight largest oil companies recently reporting more than $90 billion in combined Q2 profits. The USO ETF is considered a direct crude bet, as it primarily gains or loses based on movements in crude futures. This fund has already demonstrated its sensitivity to geopolitical shocks.