The conflict between the U.S., Israel, and Iran is sending shockwaves through global crude oil markets. Refineries in Europe and Asia are paying record high prices for crude, a staggering reflection of the tightening supply chain.
This supply crunch stems primarily from the effective closure of the Strait of Hormuz, a chokepoint responsible for roughly 20% of global petroleum flow. With Iran halting transit, approximately 12 million barrels per day — amounting to roughly 12% of the global supply — has been removed from the market. Last month, Brent crude futures surged to $119.50 per barrel, marking the highest levels since 2022.
For investors, the immediate concern is the inflationary wave these prices may trigger across the global economy. Furthermore, as transportation and production costs in the Persian Gulf remain affected, there is a renewed focus on domestic production. This pivot has placed a spotlight on upstream companies — those focused on exploration and production (E&P) — which maintain the highest sensitivity to spot price appreciation.
Global Supply Disruptions and the Texas Oil Advantage
The Texas Capital Texas Oil Index ETF (OILT ) has emerged as a primary beneficiary of this energy landscape. E&P margins expand in direct correlation with crude prices, leading OILT to significantly outperform broader energy benchmarks in recent months. Furthermore, OILT has posted a year-to-date return of 42.5% as of April 6, notably outpacing the Energy Select Sector SPDR Fund (XLE ), which rose 34.2% in the same period.
OILT tracks the Alerian Texas Weighted Oil & Gas Index (ATXWO), an economic-value weighted index of energy companies that extract oil and gas within Texas. The top names in the fund include Diamondback Energy (FANG), ConocoPhillips (COP), Occidental Petroleum (OXY), Exxon Mobil (XOM), EOG Resources (EOG), as well as Crescent Energy (CRGY).
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vettafi.com is owned by VettaFi LLC (“VettaFi”). VettaFi is the index provider for OILT, for which it receives an index licensing fee. However, OILT is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OILT.
