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Energy ETFs Rallying on Gulf Crisis: 5 High-Yielding Winners

Sanghamitra Saha

Though the markets were tumultuous at the start of May due to renewed trade tensions, oil did not seem to suffer much, owing to the sudden eruption of the Middle East crisis. Fears of supply disruptions made oil and energy-related ETFs winners lately. United States Brent Oil Fund, LP BNO is up 3.2% for the week and is on track for its first gain in three weeks. WTI crude ETF United States Oil Fund, LP USO is up 2.5% in the past five trading sessions (as of May 16, 2019).

What Happened in Middle East?

Per CNBC.com,a Saudi-led military coalition in Yemen carried out several air strikes on the Houthi-held capital Sanaa on Thursday after the Iranian-aligned movement claimed responsibility for drone attacks on two Saudi oil pumping stations earlier in the week.” On Monday, Saudi Arabia said two of its oil tankers were sabotaged off the coast of the United Arab Emirates.

Other Tailwinds for Oil Patch

Overall, oil has been steady this year. The almost year-long U.S.-Iran tensions worsened in late April as Washington has announced that it won’t renew waivers previously granted on Iran oil import sanctions. In November, Washington had offered temporary oil import waivers to eight key buyers — China, India, Greece, Italy, Taiwan, Japan, Turkey and South Korea.

But now, the Trump administration plans to toughen the sanctions and stop permitting the above-mentioned countries to import Iranian crude oil. The move resulted in a sharp spike in oil prices initially, though the liquid commodity fell in late-April after Trump said he pressed OPEC to make up for the lost Iranian output (read: Top ETF Stories of April). 

Also, in early 2019, the Trump administration imposed sweeping sanctions against Venezuelan state-owned oil firm Petróleos de Venezuela, S.A. PDVSA makes up nearly all of Venezuela’s exports.And U.S. sanctions came in response to the re-election of socialist President Nicolas Maduro, a vote broadly viewed as sham (read: Oil Jumps: 4 ETFs to Benefit & 4 to Suffer).

Apart from these, output cut from the OPEC and non-OPEC allies is in place. The market is also waiting for a decision from the OPEC and other producers if they could prolong the cuts and shore up prices.

Against this backdrop, we highlight a few oil and energy ETFs that gained the most in the past week. Most of the funds are from the high-yielding MLP segment (see all MLP ETFs here).

ETF Picks

ETRACS NYSE Pickens Core Midstream Index ETN (PYPE) – Up 5%, yields 3.70% annually

American Energy Independence ETF (USAI) – Up 4.4%, yields 5.37% annually

Alerian Energy Infrastructure ETF (ENFR) – Up 4.3%, yields 5.04% annually

Tortoise North American Pipeline Fund (TPYP) – Up 3.5%, yields 3.84% annually

VanEck Vectors High Income MLP ETF (YMLP) – Up 3.5%, yields8.36% annually

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VanEck Vectors High Income MLP ETF (YMLP): ETF Research Reports
 
Tortoise North American Pipeline Fund (TPYP): ETF Research Reports
 
US Commodity Funds United States Oil Fund (USO): ETF Research Reports
 
Alerian Energy Infrastructure ETF (ENFR): ETF Research Reports
 
United States Brent Oil Fund LP (BNO): ETF Research Reports
 
UBS ETRACS NYSE Pickens Core Midstream Index ETN (PYPE): ETF Research Reports
 
American Energy Independence ETF (USAI): ETF Research Reports
 
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