As tensions between the United States and Iran have recently escalated, reigniting geopolitical strains in the Middle East, international oil prices have surged. As a result, related exchange-traded notes (ETNs) are also on a tear.
According to the Korea Exchange (KRX) on the 26th, as of the 24th, the closing price of "Meritz Leveraged WTI Crude Oil Futures ETN(H)" was 51,490 won, up 69% from the end of last month (30,465 won).
This product tracks twice the daily return of West Texas Intermediate (WTI) crude oil futures listed on the New York Mercantile Exchange (NYMEX), allowing investors to capture double the return when WTI futures prices rise.
Seven of the top 10 ETNs by return this month were products that profit when international oil prices rise. During the same period, "Shinhan Bloomberg Leveraged WTI Crude Oil Futures ETN B" also gained 61.1%, while "Samsung Leveraged WTI Crude Oil Futures ETN" (60.8%), "Korea Investment & Securities Co. Leveraged WTI Crude Oil Futures ETN B" (60.8%), and "KB S&P Leveraged WTI Crude Oil Futures ETN B" (60.6%) also climbed in tandem.
These ETNs far outperformed the KOSPI return (-21%) this month.
This is seen as the result of international oil prices soaring again as military tensions between the United States and Iran have recently intensified. Earlier, at the end of February, a war broke out between the United States and Iran. A cease-fire agreement followed in early April, and a memorandum of understanding (MOU) was signed in mid-June, leading to interpretations that the war had effectively entered its final phase.
However, Iran subsequently carried out successive attacks on ships in the Strait of Hormuz, and the United States resumed airstrikes on Iran, effectively breaking the cease-fire. More recently, the pro-Iran Houthi rebels in Yemen declared a blockade of the Bab el-Mandeb Strait at the entrance to the Red Sea, and President Trump also hinted at the possibility of a large-scale attack on Iran, heightening concerns about disruptions to Middle East oil supplies.
Accordingly, international oil prices are once again trending toward $100. As of the 23rd (local time), September delivery WTI futures settled at $92.19 per barrel, up 33% from the end of last month. Brent crude also closed at $100.69 per barrel, topping $100 per barrel for the first time in about two months. That is a 38% surge from the end of last month.
With the spike in international oil prices, refining-themed stocks have also jumped this month. 한국석유 shares are up 10% this month, while S-Oil(42%) and Hung-gu Oil(024060) (49%) have each surged more than 40%.