Three Top Ways to Trade the Israeli Conflict

Oct 10, 2023

With Israel at war with Hamas, oil prices are starting to gush higher. And unless the situation can cool off – which doesn’t seem likely at this point – there’s fear the situation could get far worse than it is now. For one, if Iran was also involved in the attack, they could face potential retaliation, which could inflame concerns over the Strait of Hormuz.

After all, as noted by MarketWatch, “Iran remains a very big wild card and we will be watching how strongly [Israeli] Prime Minister Netanyahu blames Tehran for facilitating these attacks by providing Hamas with weapons and logistical support,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.

Two, there are growing calls for tightening U.S. sanctions against Iran with this latest situation. “Most immediately, Biden is facing calls from both Democratic and Republican lawmakers to tighten enforcement of sanctions restricting oil exports by Iran, Hamas’ main sponsor and supporter,” as noted by E&E Daily.

If you’re in the region, please stay safe.

SPDR Energy Select Sector ETF (XLE)

With an expense ratio of 0.10%, 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. The last time we mentioned the XLE ETF, it traded at $81. It’s now up to $88.80, and still attractive.

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.

The last time we spoke about XOP it traded at $146. While it slipped to $145.49, it’s still an attractive opportunity here.

iShares Global Energy ETF (IXC)

The iShares Global Energy ETF seeks to track the investment results of an index composed of global equities in the energy sector. With an expense ratio of 0.40%, some of its top holdings include Exxon Mobil, Chevron Corporation, BP PLC, Total SA, and EOG Resources. The IXC ETF has a current expense ratio of 0.40%. The last time we spoke about the IXC ETF, it traded at $38. It’s now at $40.68, and also still attractive.

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