As the U.S. war in Iran enters its third month, the market has seemingly stabilized after initial concerns about energy industry shocks and the price of oil. However, ongoing political developments—including the continuing ceasefire beginning in early April—mean that uncertainty is still very much a predominant factor. Investors may anticipate further volatility if the ceasefire should end and conflict resumes.
One way to play this unpredictability is through exchange-traded funds (ETFs), which allow a portfolio to benefit from industry-specific surges. Below are two funds worth considering, depending on whether you have an optimistic or pessimistic view of future developments in the Middle East.
A Modestly Priced, Liquid Approach to Crude Oil
The United States Oil Fund LP (NYSEARCA: USO) is one of the most popular exchange-traded products providing exposure to oil. As a commodity pool, USO holds oil futures in an attempt to track the daily price changes of light, sweet crude oil. Notably, this type of oil is predominant in the United States, meaning that USO may be uniquely tied to the domestic oil market.
For its unique focus, USO charges an expense ratio of 0.60%. This is actually cheaper than many of the alternatives in the space, and as an added bonus, USO also has excellent liquidity. Its one-month average trading volume hovers above 27 million, despite not being the largest fund by volume (its assets under management include about $1.9 billion in funds).
As these figures suggest, USO is popular as a short-term trade among more active investors. This is both because of the potential to achieve gains on near-term price movements in crude oil, but also because the fund's futures contract approach means it is subject to contango. Investors looking for a long-term buy-and-hold fund to wait out developments in the Iran war may be better off elsewhere. Nonetheless, if the price of oil should continue to rise—a result investors may find increasingly likely if a ceasefire does not hold and attacks resume—USO may be a good way to take advantage of that movement.
An Airline-Focused Fund Ready to Take Off If Fuel Supplies and Prices Normalize
Investors expecting the war to cool might look to one of the industries most negatively impacted by the conflict in the first place: airlines. Companies in this space have had to contend not only with supply and price pressures for jet fuel, but also with the potential for changes in routes and operations due to regional instability.
The U.S. Global Jets ETF (NYSEARCA: JETS) targets an index of air travel industry firms, including not only airlines themselves but also companies responsible for manufacturing and servicing planes, among other things.
Though it's a global fund, it is primarily focused on domestic names and holds many of the largest airline firms in the world. Delta Air Lines Inc. (NYSE: DAL), American Airlines Group Inc. (NASDAQ: AAL), and United Airlines Holdings Inc. (NASDAQ: UAL) collectively make up about a third of the fund's portfolio.
The focus exclusively on air travel is unique to JETS, distinguishing it from a number of broader transportation funds, and this is what may make this fund particularly appealing to investors betting that the diplomacy between the United States and Iran will improve. So far, JETS' year-to-date performance reflects that the opposite has been the case—the fund is down about 8% in 2026.
With an expense ratio exactly the same as USO's above, JETS provides a smaller asset base of about $725 million and lower trading volumes, though this is not uncommon for an ETF with a niche strategy like this. Investors may want to keep in mind that JETS does offer a dividend, though with a yield of 0.5% this is not so much a dividend play as a passive income boost on top of the fund's core strategy.
To be sure, there are many other ETFs that would stand to benefit if the ceasefire continues or the war stops altogether. The more oil-dependent an industry is, the more investors might expect it to surge if that development takes place. Even broader developed or emerging markets funds may climb if the Strait of Hormuz is reopened and global shipping normalizes, allowing not only energy markets but global trade overall to stabilize once again.
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The article "2 ETFs to Play Both Sides of the Iran War Ceasefire" first appeared on MarketBeat.
