Energy ETFs Outperforming in 2025 as Oil Price Surges

The price of WTI crude oil approached $80, marking a five-month high, and lifted ETFs holding oil and energy stocks in the process.

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sumit
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Senior ETF Analyst
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Reviewed by: Paul Curcio
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Edited by: Kiran Aditham

The price of West Texas Intermediate (WTI) crude oil futures topped $79 per barrel for the first time since August this week on the back of Russia-related supply worries.

Late last week, the U.S. Treasury Department ratcheted up the pressure on Russia’s oil industry by placing sanctions on Russian oil producers and oil-carrying vessels. 

“The U.S. Department of the Treasury took sweeping action to fulfill the G7 commitment to reduce Russian revenues from energy, including blocking two major Russian oil producers,” the government division said in a press release.

“Today’s actions also impose sanctions on an unprecedented number of oil-carrying vessels, many of which are part of the shadow fleet, opaque traders of Russian oil, Russia-based oilfield service providers, and Russian energy officials,” the Treasury Department added.

Oil ETFs Rise 

The fresh sanctions raised concerns about oil supplies. Russia is the second-largest oil exporting country in the world behind Saudi Arabia, and the third-largest producer of the commodity behind the U.S. and Saudi Arabia.

The United States Oil Fund (USO), which tracks WTI futures contracts and has $1.3 billion in assets under management, jumped 4.3% on Friday and another 2% on Monday before shedding less than 1% on Tuesday.

The ETF is already up 8% this year after rising 13.4% in 2024.

The Energy Select Sector SPDR Fund (XLE), which holds stocks of oil companies, is up more than 6% this year, making it the best-performing sector ETF within the SPDR suite. 

Last year, XLE rose just 5.5%, distantly underperforming the S&P 500’s 25% return.

Supply Impact

Whether the rally in oil continues will depend on the ultimate impact from the U.S. sanctions on Russia’s oil supplies, as well as other factors affecting oil supply and demand. 

“New U.S. sanctions on Russia’s oil industry went further than expected,” analysts at Morgan Stanley said in a research note quoted by Bloomberg News. “It will take some time to digest these measures, but this creates downside risks to oil supply, at least for a period.”

Prices for Brent crude oil were last quoted around $80 per barrel. 

Sumit Roy is the senior ETF analyst for etf.com, where he has worked for 13 years. He creates a variety of content for the platform, including news articles, analysis pieces, videos and podcasts.

Before joining etf.com, Sumit was the managing editor and commodities analyst for Hard Assets Investor. In those roles, he was responsible for most of the operations of HAI, a website dedicated to education about commodities investing.

Though he still closely follows the commodities beat, Sumit covers a much broader assortment of topics for etf.com, with a particular focus on stock and bond exchange-traded funds.

He is the host of etf.com’s Talk ETFs, a popular video series that features weekly interviews with thought leaders in the ETF industry. Sumit is also co-host of Exchange Traded Fridays, etf.com’s weekly podcast series.

He lives in the San Francisco Bay Area, where he enjoys climbing the city’s steep hills, playing chess and snowboarding in Lake Tahoe.

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