The U.S.- and Israeli-led war against Iran has continued into late August after beginning in February 2026, albeit with intermittent ceasefires and failed negotiations. The latest attempts at a settlement have again faltered, while Iran continues to enforce a de facto blockade of the Strait of Hormuz, one of the world’s most important oil-shipping chokepoints.
“Volatility tied to the Strait of Hormuz has reinforced the strategic importance of domestic energy infrastructure and supply chains,” explains Mark Marifian, head of product at Tortoise Capital. “With roughly 20 million barrels per day typically flowing through the strait, recent disruptions have constrained flows by more than 90%.”
American consumers have felt the consequences at the pump, but another effect is showing up in the U.S. Strategic Petroleum Reserve (SPR). The SPR is the country’s emergency crude stockpile, stored in underground salt caverns along the Gulf Coast. Recent withdrawals have pushed the SPR below 300 million barrels for the first time since 1983.
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That’s a fraction of the reserve’s authorized storage capacity of 714 million barrels and leaves considerably less room for additional emergency releases if disruptions around the Strait of Hormuz persist. A stockpile originally intended to protect the U.S. against import interruptions has increasingly become a tool for cushioning consumers from the energy costs of the current conflict.
While consumers have faced higher energy costs, major oil producers have benefited from higher crude prices. According to CNBC, the five Western supermajors, Exxon Mobil Corp. (ticker: XOM), Chevron Corp. (CVX), BP PLC (BP), Shell PLC (SHEL) and TotalEnergies SE (TTE) collectively generated approximately $48 billion in profit during the second quarter.
Those windfalls are increasingly attracting political attention. Finance ministers from Germany, Italy, Austria, Poland and Portugal, together with Spain’s economy minister, recently backed a joint letter calling for an EU-wide windfall tax on oil companies benefiting from higher prices.
Unsurprisingly, energy investors have benefited considerably. The State Street Energy Select Sector SPDR ETF (XLE), which isolates the 21 large-cap energy companies within the S&P 500, has substantially outperformed the broader market in 2026. Exxon Mobil and Chevron alone account for more than one-third of XLE’s portfolio due to its market-cap-weighted methodology.
For investors expecting geopolitical disruptions, constrained supply and elevated oil prices to persist, energy ETFs can provide a diversified way to gain exposure without betting on a single producer.
Here are seven of the best energy ETFs to buy now:
| ETF | Expense Ratio |
| Vanguard Energy ETF (VDE) | 0.09% |
| State Street Energy Select Sector SPDR Premium Income ETF (XLEI) | 0.35% |
| State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP) | 0.35% |
| Tortoise North American Pipeline ETF (TPYP) | 0.40% |
| Tortoise MLP ETF (TMLP) | 0.50% |
| VanEck Oil Refiners ETF (CRAK) | 0.61% |
| VanEck Oil Services ETF (OIH) | 0.35% |
Vanguard Energy ETF (VDE)
XLE’s energy-sector exposure is limited to the large-cap companies found within the S&P 500. Investors who also want exposure to mid- and small-cap U.S. energy stocks may favor VDE, which holds a broader portfolio of 111 companies. Its market-cap weighting means the largest holdings remain similar to XLE’s, albeit at lower weights. VDE charges a 0.09% expense ratio and currently pays a 1.8% 30-day SEC yield.
“A broad, index-based ETF like VDE offers low-cost access to the full energy sector, from large, established producers to key service and midstream companies,” says Kathy Kellert, head of index equity product at Vanguard. “Rather than trying to forecast commodity prices, which can be volatile and cyclical, investors may be better served using VDE as part of a balanced, long-term investment strategy.”
State Street Energy Select Sector SPDR Premium Income ETF (XLEI)
“Overlooked by investors, energy stocks were already gaining momentum before the Feb. 28 conflict started,” says Michael Arone, chief investment strategist and managing director at State Street Investment Management. “Expectations for a global cyclical upswing, combined with lighter regulation, disciplined capital spending, and ongoing innovation in exploration and production helped.”
Energy investors prioritizing income over capital appreciation may find XLEI appealing. The ETF holds the same portfolio of S&P 500 energy stocks as XLE but adds a covered-call overlay to generate additional income. This caps some upside participation when energy stocks rally, but monetizes their elevated volatility. XLEI currently has a 19.3% annualized distribution yield with monthly payouts.
State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
“After a decade of focusing on efficiency and doing more with less, energy companies are now beginning to benefit from what could be a meaningful increase in their revenue outlook,” Arone says. With buybacks potentially less attractive at higher valuations, producers can instead return excess free cash flow through higher regular dividends or reduce debt to strengthen their balance sheets.
The energy companies most sensitive to commodity prices tend to operate in the upstream segment. These exploration and production companies locate oil and gas reserves, drill wells and extract hydrocarbons for sale. Investors can target this segment through XOP, which tracks an equal-weighted benchmark of 51 holdings. The ETF charges a 0.35% expense ratio and pays a 1.6% 30-day SEC yield.
Tortoise North American Pipeline ETF (TPYP)
Energy investors seeking lower volatility and above-average income may prefer the midstream segment, which includes the pipelines and terminals used to transport and store oil and natural gas. One option is TPYP, which provides exposure to major North American operators including TC Energy Corp. (TRP), Enbridge Inc. (ENB), Williams Cos. Inc. (WMB), Kinder Morgan Inc. (KMI) and Oneok Inc. (OKE).
“Investors are increasingly recognizing that North American energy infrastructure provides both stability and income, even as global markets face a potential 15-to-16-million-barrel-per-day export deficit,” Marifian says. “The U.S. operates one of the most resilient and flexible energy systems in the world, with pipelines, storage and export capacity helping to insulate domestic markets.”
Tortoise MLP ETF (TMLP)
Not all midstream companies are structured as conventional C corporations. Many operate as master limited partnerships (MLPs), whose pass-through structure can support above-average yields but also leaves investors dealing with Schedule K-1 tax reporting. TMLP sidesteps much of that tax complexity by obtaining synthetic exposure to the Tortoise MLP Index through a total return swap.
“With global supply chains under pressure and futures markets reflecting elevated risk premiums, the importance of U.S. natural gas infrastructure and liquefied natural gas (LNG) exports also continues to rise,” Marifian says. “The U.S. has emerged as a leading LNG supplier, leveraging its vast pipeline network and export capacity to deliver energy to global markets when it’s needed most.”
VanEck Oil Refiners ETF (CRAK)
“We believe the current dynamic is constructive for crack spreads, particularly for complex refiners with access to discounted crude supplies,” says Andrew Musgraves, vice president and senior product manager at VanEck. “With global refining capacity still relatively constrained, refiners remain one of the clearest ways to express that imbalance.” This segment of the energy market can be targeted via CRAK.
For a 0.61% expense ratio, CRAK tracks the MVIS Global Oil Refiners Index, with Marathon Petroleum Corp. (MPC), Valero Energy Corp. (VLO) and Phillips 66 (PSX) among its largest holdings. Unlike upstream explorers and producers, whose results depend heavily on operational efficiency, downstream refiners are more exposed to supply-demand dynamics, making them particularly sensitive to geopolitics.
VanEck Oil Services ETF (OIH)
“OIH captures the oil services segment, which is directly leveraged to upstream capital spending and the ongoing need to sustain and grow global energy supply,” Musgraves explains. “Current geopolitical tensions involving Iran reinforce the importance of energy security and are likely to support continued investment in exploration and production.” This ETF is cheaper than CRAK with a 0.35% expense ratio.
Opting for oil services companies such as SLB Ltd. (SLB), Baker Hughes Co. (BKR) and Halliburton Co. (HAL) is akin to targeting the energy sector’s “picks and shovels.” Rather than producing, transporting or refining hydrocarbons themselves, these support-oriented firms provide the equipment, technology and services that upstream exploration and production companies need to operate.
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7 Best Energy ETFs to Buy Now originally appeared on usnews.com
Update 08/24/26: This story was previously published at an earlier date and has been updated with new information.
