## [# Surging Oil ETFs Get Extra Boost From Backwardation](/sections/features/surging-oil-etfs-get-extra-boost-backwardation)
# Surging Oil ETFs Get Extra Boost From Backwardation
USO and BNO are surging alongside crude prices, but steep backwardation in the oil futures curve could help the funds outperform if supply disruptions persist.
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[By Sumit Roy ](/authors/sumit-roy)
Mar 12, 2026
Edited by: ETF.com Staff
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Investors in oil ETFs have seen a windfall this year as the war between the U.S./Israel and Iran has severely disrupted shipping through the Strait of Hormuz, effectively bringing traffic out of the Gulf region to a standstill.
The [**United States Oil Fund (USO)**](/uso) and the [**United States Brent Oil Fund (BNO)**](/BNO) are each up around 68% so far this year.
Those gains are ahead of the roughly 66% and 64% increases in front-month WTI and Brent crude oil futures, respectively. And if the supply situation remains tenuous, the ETFs could continue to outperform futures.
That’s because returns for these funds depend not only on the direction of oil prices, but also on the shape of the futures curve. Because futures contracts expire, the funds must periodically roll their positions from one contract into the next.
When the market is in contango, later-month contracts are priced higher than near-month contracts. That effectively forces funds to buy higher-priced contracts each time they roll. Backwardation is the opposite.
Right now, supply fears have pushed front-month prices well above later-month prices, creating steep backwardation. As I’m typing this, front-month Brent for May delivery is just shy of $100, while June is around $96 and July is roughly $92.
*Source: Bloomberg*
Rolling from May into June at current prices would allow a fund to buy roughly 4% more exposure.
Large production disruptions often lead to backwardation as users scramble to secure oil for immediate delivery. Later-month contracts trade at lower prices because markets expect the disruption to eventually ease. For example, May 2027 Brent contracts are trading around $75, well below current front-month prices.
It’s a similar situation for WTI. May is currently around $93.70, versus less than $90 for June. Given how volatile oil has been, these numbers will likely be different by the time you read this, but the point still stands: backwardation is steep and that benefits oil ETFs.
Of course, the direction of oil prices will matter most. A 4% gain from rolling futures contracts doesn’t matter much if crude prices fall 10–20% or more from here. And that ultimately depends on geopolitical developments that are almost impossible to predict.
An escalation in the conflict and a continued disruption in the Strait of Hormuz lasting weeks or months could push oil prices to $200 or more, some analysts believe. On the other hand, some sort of resolution could send prices back toward where they were before the war—$70 or lower.
But for now, the shape of the futures curve is working in investors’ favor. Even if oil prices remain flat, investors in these ETFs could benefit from positive roll yield.
The biggest risk is a quick resolution to the conflict and a sharp drop in oil prices.
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[ Sumit Roy Senior ETF Analyst ](/authors/sumit-roy)
Sumit Roy is the senior ETF analyst for etf.com and author of (Don't) Invest Like a Pro. He creates a variety of content for the platform, including… [View Bio](/authors/sumit-roy)
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