The Betashares Crude Oil Index Currency Hedged Complex ETF (ASX: OOO) is $9.44 per unit, up 48.9% in just one month.
This commodity-tracking ASX exchange-traded fund (ETF) is riding the wave of skyrocketing oil prices as the war in Iran drags on.
Over the past month, the Brent crude oil price has soared 38% to US$107.40 per barrel today.
The US West Texas Intermediate (WTI) crude oil price is up 44% over the month to US$102.95 per barrel at the time of writing.
Image source: Getty Images
What's the latest in the Middle East?
Tensions in the Middle East escalated over the weekend after the Iran-backed Houthis of Yemen joined the war and attacked Israel.
Yemen's involvement adds further upside risk to oil and gas prices, as it sits alongside the Red Sea and the Strait of Bab al-Mandeb.
Shipments of oil and gas flow through this strait, just as they do the Strait of Hormuz, which runs alongside Iran and is effectively closed.
US President Donald Trump says he'll bomb Iran's electricity plants, oil facilities, and desalination plants if the Strait of Hormuz is not reopened.
Meanwhile, Iran is reportedly urging militant groups to prepare to disrupt shipping through the Red Sea.
Trading Economics analysts said:
Such developments risk further tightening energy flows from the Middle East, as two of the main strategic waterways in the world for trade and energy supplies could potentially be cut off.
The inability of tankers to sail out of the Middle East has created a global oil shock.
Petrol and diesel prices in Australia have soared, with the Federal Government halving the fuel excise from tomorrow to provide relief.
While the US continues to claim that negotiations with Iran are going well, President Trump is still considering sending in ground troops.
Meanwhile, ASX 200 energy shares have soared since the conflict began, as has the price of the OOO ETF.
ASX ETF a popular trade as oil prices rocket
Data from online investment platform Stake shows OOO has been the fifth-most traded ASX ETF among Aussie investors this month.
Kylie Purcell, Senior Markets Analyst at Stake, said many new investors to the platform have been active this month, commenting:
In commodities, many are looking to capitalise on large price swings by trading oil ETFs and related stocks.
How does ASX OOO work?
This ASX ETF aims to track the S&P GSCI Crude Oil Index Excess Return, hedged against AUD/USD currency movements.
This allows ASX investors exposure to WTI crude oil futures, rather than the spot price.
Betashares explains:
The price of oil futures contracts is not the same as the "spot price" of oil. As such, OOO does not aim to, and should not be expected to, provide the same return as the performance of this spot price.
The performance of an ETF that is linked to oil futures may be materially different to the performance of the spot price of oil itself.
This is because the process of "rolling" from one futures contract to the next to maintain investment exposure can result in either a cost or benefit to the Fund, affecting returns.
OOO ETF is backed by cash, which is held in bank accounts with a third-party custodian on behalf of unitholders.
