The SPDR S&P Oil & Gas ETF rises on Middle East supply cuts but could retreat if Strait of Hormuz reopens fully by 2027.
The SPDR S&P Oil & Gas Exploration & Production ETF (XOP) has climbed 43% year-to-date to near $179, driven by a WTI rally after Middle East disruptions shut in 10.5 million barrels per day of Gulf production in April. The fund’s performance hinges on the pace of tanker traffic resuming through the Strait of Hormuz, with faster normalization threatening to erase gains by 2026.
WTI prices peaked at nearly $115 in early April before settling around $85 as partial flows resumed. XOP’s equal-weighted structure amplifies its sensitivity to crude swings, while its 0.35% expense ratio offers a low-cost play on U.S. shale cash flow. Top holdings include Exxon Mobil, Chevron, and Occidental, all benefiting from current strip prices.
The EIA forecasts Brent could fall to $79 by 2027 if production rebounds, pressuring XOP’s largest holding, Venture Global, whose margins rely on gas spreads tied to Qatari LNG flows.