U.S. Oil Fund Surpasses Oil Futures with 23% Yearly Gain on Middle East Rally
U.S. Oil Fund shares rose as crude rallied roughly 17% over the past month, driving the ETF to a 23% gain over the past 12 months versus a 9% rise in benchmark oil futures. A strategist warns oil would trade in the $40s without the Iran conflict, posing downside risk.
1. Geopolitical Tensions Spark Crude Rally
As Middle East tensions escalate around the Strait of Hormuz, near-term crude futures have jumped roughly 17% in the past month, directly lifting USO's tracking performance given its focus on front-month oil contracts.
2. Outperformance Against Benchmark Futures
Over the last 12 months, USO has posted a 23% gain compared to a 9% increase in U.S. benchmark oil futures, while its five-year return exceeds 100% versus a 17% rise in spot prices.
3. Conflict-Driven Price Risk
A commodity strategist highlights that without the Iran conflict premium, oil prices would likely trade in the $40s per barrel, suggesting that a de-escalation could trigger a correction in futures-based ETFs like USO.