Beyond Oil And Gold: Can We Expect A Surge In 'Crisis Alpha' ETFs Amid Israel-Iran Tensions?

The growing Middle Eastern conflict is causing tremors in worldwide markets, leading investors to recalculate their exposure to geopolitical risk. With oil surging, gold picking up speed, and defense assets gathering strength, some ETFs have gained sharp focus. Yet, beyond the familiar suspects in defense and energy, a more pervasive thematic rotation seems to be coming into focus, spotlighting those ETFs providing indirect exposure to increased volatility, inflation fears, and international trade disruptions. These are the ‘crisis alpha’ plays — investment strategies that bet on the market trends that occur as a result of a crisis.

on June 11, 2025, U.S. crude futures jumped more than 4% to $68 a barrel, its biggest one-day rise since October on rising disagreements between the U.S. and Iran. Brent Crude prices surged as much as 7% on Friday. Fears in the market were fueled further after Israel launched a surprise attack against Iranian targets on June 12, heightening geopolitical risk in the already volatile region. In turn, industry-specific ETFs like United States Oil Fund LP USO, United States Brent Oil Fund LP BNO, and Energy Select Sector SPDR Fund XLE saw significant gains.

As energy, gold, and defense ETFs retain safe-haven flows, other thematic funds that will benefit from the broader ramifications of conflict-driven market dislocations are also gaining focus.

ETFs To Monitor With Rising Middle East Tensions

Inflation-Protection Tactics

The price rebound in oil and increasing geopolitical uncertainty have reignited inflation concerns, which have fueled interest in ETFs dedicated to real assets and inflation beneficiaries. The Horizon Kinetics Inflation Beneficiaries ETF INFL and the ProShares Inflation Expectations ETF RINF give investors access to companies and assets likely to fare well in an inflationary environment. If crude oil continues higher, inflation-sensitive groups could see increased interest in the days to come. INFL has gained around 1% after Israel attacked Iran and is up 0.35% as of 10.23 a.m. ET, Friday.

Supply Chain And Shipping Risks

With the United Kingdom issuing its own maritime warning about possible disruptions at the Strait of Hormuz, a vital chokepoint for global oil shipments, shipping and global logistics-based ETFs might see increased attention. The Breakwave Dry Bulk Shipping ETF BDRY, which is up 6.7% this week so far, offers focused exposure to firms engaged in international shipping and logistics, groups of companies frequently touched by geopolitical tensions.

Cybersecurity And New Defense

As the nature of new warfare spreads beyond territorial limits to the cyberspace arena, ETFs dedicated to surveillance and cybersecurity are becoming more pertinent. The ETFMG Prime Cyber Security ETF HACK, with a portfolio of firms engaged in safeguarding digital infrastructure, would profit from the growing demand for cyber defense against the threat of retaliatory strikes on essential systems.

Volatility Trading Products

For traders and tactical investors, the growing uncertainty has renewed interest in volatility-linked ETFs. Vehicles like the ProShares VIX Mid-Term Futures ETF VIXM and the Barclays iPath Series B S&P 500 VIX Short-Term Futures ETN VXX are used to hedge against market fluctuation. VIXM is up 2%, and VXX has gained 5% as of 10.23 a.m. ET, Friday. The ProShares Short VIX Short-Term Futures ETF SVXY provides traders with an opportunity to bet on a possible cooling-off in volatility after high-stakes negotiation. Right now though, the ETF is down nearly 3% on Friday morning.

A Broader Rotation Into "Crisis Alpha" Plays

The market reaction is no longer just about oil. Investor interest is broadening into ETFs that provide thematic exposure to sectors positioned to weather systemic shocks—whether that's through inflation protection, supply chain resilience, or cybersecurity.

While diplomatic channels continue to be uncertain and tensions exhibit no near-term tendency to de-escalate, investors might continue to find shelter in ETFs, which provide both defensive positioning and opportunistic upside. With top-level meetings between the U.S. and Iran set for this Sunday in Oman, the result may turn out to be crucial not just for diplomatic stability but also for ETF market dynamics in the near term.

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