The sharp resurgence in crude prices has transformed the performance profile of oil-linked ETFs in 2026. USO, one of the most widely followed vehicles for gaining exposure to U.S. crude prices, has more than doubled on a total-return basis this year as escalating Middle East supply risks pushed WTI above $100 a barrel.

USO Provides Futures-Based Exposure to Crude Oil

USO is designed to reflect the daily percentage changes in the spot price of light, sweet crude oil delivered to Cushing, Oklahoma, primarily through the Benchmark Oil Futures Contract and other oil-related interests. The fund does not hold physical barrels of crude oil. Instead, its structure relies on futures contracts and collateral holdings, meaning its performance can differ from the spot market over longer periods.

As of September 9, USO had a market price of $149.97. Its total return had reached 116.85% since the beginning of 2026, compared with a 93.32% total return at the end of August. The move reflects the acceleration in crude prices during September as geopolitical risks intensified.

Geopolitical Risk Has Reshaped the Oil Market

The latest rally has been driven by growing concerns over supply disruptions across the Middle East. On September 10, WTI futures settled at $102.48 a barrel after rising 6.69%, while Brent crude settled at $107.63 after gaining 6.34%. Both benchmarks reached their highest levels since May 19.

The market is increasingly focused on the possibility that disruptions could extend beyond a single transportation route. Attacks involving tankers, restrictions around the Strait of Hormuz and disruptions affecting Saudi energy infrastructure have raised concerns about the reliability of regional exports. OPEC also reported that its August production fell by 640,000 barrels per day, while its 2026 global oil-demand growth forecast was lowered to 380,000 barrels per day.

Why Futures Structure Matters for USO

USO’s performance is not determined solely by the headline price of WTI. Futures-market conditions, including contango and backwardation, can affect returns as the fund rolls contracts forward. Beginning in 2026, USO has sought to rebalance approximately 20% of the announced notional value of its nearest-month instrument on each day of a five-day roll period, reinvesting proceeds across remaining and further-dated holdings.

The fund carries a 0.86% expense ratio. Its structure also means that a prolonged divergence between futures prices and the physical oil market can influence results. USO’s own methodology targets the average daily percentage change in NAV over 30 successive valuation days to remain within plus or minus 10% of the corresponding average daily change in its Benchmark Oil Futures Contract.

Going forward, the key variables for USO will be the duration of Middle East supply disruptions, the direction of Chinese crude demand, OPEC production and U.S. inventory data. If supply risks remain elevated, oil prices could stay under pressure from tight physical markets. Conversely, improved shipping conditions, higher production or weaker global demand could rapidly reduce the geopolitical premium embedded in crude prices, creating a very different performance environment for USO.