Oil prices are nearing $80 a barrel thanks to heightened tensions in the Middle East.
According to reports, Houthis continued attacks in the Red Sea and the Bab al-Mandab Strait with about four vessels hit by drone and missile strikes. In addition, as noted by CNBC, “OPEC expects a tight crude market this year with demand forecast to grow by 2.2 million barrels per day, while production outside the cartel is expected to rise by 1.2 million barrels per day. That would imply a supply deficit this year unless OPEC reverses its production cuts.”
One way to trade higher oil prices is by taking a position in stocks, such as Exxon Mobil (XOM), Chevron (CVX), and Occidental Petroleum (OXY).
Or, investors can always jump into oil0-related ETFs such as:
SPDR Energy Select Sector ETF (XLE)
With an expense ratio of 0.12%, the XLE ETF provides exposure to companies in the oil, gas and consumable fuel, energy equipment and services industries, as noted by State Street SPDR. Not only does an ETF allow for diversification, you can buy it for less than a single one of its holdings
SPDR S&P Oil & Gas Exploration & Production ETF (XOP)
With an expense ratio of 0.35%, the ETF provides exposure to the oil and gas exploration and production segment of the S&P TMI, which comprises the following sub-industries: Integrated Oil & Gas, Oil & Gas Exploration & Production, and Oil & Gas Refining & Marketing, as noted by State Street SPDR. Some of its top holdings include Callon Petroleum, SM Energy Company, Devon Energy Corporation, EOG Resources, and ConocoPhillips, for example.
iShares Global Energy ETF (IXC)
The iShares Global Energy ETF tracks stocks, such as Exxon Mobil, Chevron Corporation, BP PLC, Total SA, and EOG Resources.
