S&P500 Forecast: Will Exxon, Chevron, and XLE Climb Further as Oil Prices Rise?

Iran-Israel Conflict Fuels Oil Price Surge: What’s Next for Energy Stocks and ETFs?

The escalating Iran-Israel conflict has pushed crude oil prices to five-month highs, with traders now bracing for deeper market disruptions. U.S. crude has jumped over 11% in a week, hitting $76.50 per barrel, while Brent rose to $77.80, driven by expanding hostilities that now include nuclear sites and civilian infrastructure. With tensions showing no signs of easing, investors are piling into energy stocks and ETFs, seeking both protection and profit.

OPEC, Geopolitics and the Premium Now Built Into Crude

Oil’s latest rally—its most sustained since the Russia-Ukraine war—was ignited by Israeli strikes on Iran’s Arak and Natanz nuclear facilities and Tehran’s counterattacks, including one on an Israeli hospital. This escalation marks a shift from conventional military confrontations to systemic threats against nuclear infrastructure. Former President Trump’s suggestion of potential U.S. military involvement has only deepened market uncertainty. The Kremlin’s warning of a “terrible spiral” and G7 crisis meetings underscore the global stakes.

JPMorgan, Goldman Sachs Adjust Oil Price Projections

JPMorgan has warned that regime change in Iran could bring long-term supply disruptions, pushing oil prices higher for extended periods. Analyst Natasha Kaneva cautioned that such a shift would create lasting imbalances. Goldman Sachs’ earlier call for Brent to reach $90 now looks conservative, as the crisis unfolds in ways that defy traditional supply-risk models.

Energy Stocks and ETFs See Bullish Flow on Conflict Premium

Major oil firms are already seeing upside. Exxon Mobil gained 2%, while defense giants like Lockheed Martin jumped over 3%, reflecting both energy and defense sector tailwinds. The Energy Select Sector SPDR Fund (XLE) is up more than 6% year-to-date and stands out as the top-performing sector ETF. Its large-cap focus—heavily weighted toward Exxon and Chevron—has attracted inflows seeking both stability and exposure to rising crude prices.

Meanwhile, the United States Oil Fund (USO), which tracks WTI futures, surged over 6% during the initial conflict spike. Though USO faces tracking discrepancies due to how it rolls over futures contracts—particularly during periods of contango or backwardation—it remains a high-beta play on short-term price surges.

Crude Oil Forecast: Elevated Risk Keeps Outlook Bullish

Traders should brace for elevated oil prices in the near term. The 11% rally may be the opening move in a longer and deeper market repricing. The involvement of nuclear assets, possible regime change, and uncertain U.S. policy response create risk conditions not seen since the 1970s oil crises.

With geopolitical risk premiums now embedded and traditional models falling short, the oil market remains in a structurally bullish posture—so long as diplomacy fails to cool the threat environment.

More Information in our Economic Calendar.