[Real Investment Techniques] Oil ETFs and ETNs Surge on Rising Oil Prices

Oil ETFs Take Top Two Spots in Monthly ETF Returns
Oil Prices Expected to Stabilize Once U.S.-Iran Conflict Ends
Leveraged and Inverse Products Are Highly Volatile; Caution Advised

With the surge in oil prices due to the Middle East war, related exchange-traded funds (ETFs) and exchange-traded notes (ETNs) are also experiencing significant volatility.

According to ETF Check on March 18, the ETF with the highest return over the past month was an oil ETF. As of the 16th, the one-month return of KODEX WTI Crude Oil Futures (H) was 55.96%. This was followed by TIGER Crude Oil Futures Enhanced (H) at 52.88%. In contrast, KODEX WTI Crude Oil Futures Inverse (H) and TIGER Crude Oil Futures Inverse (H), which bet on a decline in oil prices, fell 38.24% and 37.87%, respectively, during the same period, recording the largest declines among all ETFs.

A similar trend was observed with ETNs. The top 10 ETNs in terms of returns were all crude oil futures ETNs. Shinhan Bloomberg Leveraged WTI Crude Oil Futures ETN B posted the highest return at 134.34%, followed by Samsung Bloomberg Leveraged WTI Crude Oil Futures ETN B (133.73%), Korea Investment & Securities Bloomberg Leveraged WTI Crude Oil Futures ETN B (133.44%), KB S&P Leveraged WTI Crude Oil Futures ETN B (133.41%), and Samsung Leveraged WTI Crude Oil Futures ETN (133.18%).

The sharp rise in oil ETFs and ETNs is due to the surge in oil prices. Oil prices soared as the Strait of Hormuz was blocked following attacks by the United States and Israel on Iran. Before the Middle East war, oil prices were in the $60-per-barrel range, but as the war has dragged on, prices have surpassed $90 per barrel. At one point, prices even exceeded $100 per barrel.

Investors have flocked to ETFs and ETNs to capitalize on the rise in oil prices. According to the Korea Exchange, the average daily trading value of KODEX WTI Crude Oil Futures (H) this month reached 83.1 billion won. Last month's average daily trading value was about 3 billion won, meaning it has increased by a factor of 27. This month, Samsung Leveraged WTI Crude Oil Futures ETN recorded an average daily trading value of 31.4 billion won, the second highest among all ETNs. Last month, its average daily trading value was about 1.7 billion won.

Although oil prices have surged due to the Middle East war, there are projections that prices will stabilize if the conflict ends. Kim Seongno, a researcher at BNK Securities, said, "The reason for the recent spike in international oil prices is the temporary excess demand (supply shortage) in the crude oil market caused by the Iran war in March. However, as production increases led by OPEC have kept international oil prices on a downward trend since 2025, and with an oversupply of 3 million barrels per day expected to continue through 2026, if the war ends, oil prices are likely to stabilize quickly."

However, if the war drags on, concerns over oil prices are unlikely to subside easily. Hwang Sunghyun, a researcher at Eugene Investment & Securities, said, "Although international oil prices, which had surged to extreme levels, have stabilized, they remain at high levels, so a cautious approach is needed. If the war continues for a prolonged period, international oil prices are likely to remain strong or even rise further, and considering the potential disruptions in production and transportation due to geopolitical issues, the previously anticipated oversupply in the oil market this year could be quickly eliminated."

As oil prices have experienced repeated surges and drops, volatility has increased, leading to greater concerns about potential losses. In particular, for leveraged and inverse products, the 'negative compounding effect' means that the longer the period of volatility, the greater the potential for losses, so investors should exercise caution.

This content was produced with the assistance of AI translation services.