Oil exchange-traded funds (ETFs) give investors a simple way to gain exposure to the oil market without picking individual stocks or trading futures. Depending on the fund, you can target crude oil prices directly, invest in large energy companies, or focus on specific parts of the oil value chain, such as midstream companies.
Here's everything you need to know about investing in oil ETFs.
5 top oil ETFs for 2026
Oil ETF | Assets Under Management | ETF Description |
|---|---|---|
State Street Energy Select SPDR ETF (NYSEMKT:XLE) | $43.8 billion | An ETF focused on energy stocks listed in the S&P 500 index |
Vanguard Energy ETF (NYSEMKT:VDE) | $10.8 billion | A broad oil stock ETF |
Alerian MLP ETF (NYSEMKT:AMLP) | $12.1 billion | A subsector-specific oil ETF focused on midstream companies |
State Street SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT:XOP) | $3.6 billion | An oil ETF focused on exploration and production companies |
United States Oil Fund LP (NYSEMKT:USO) | $2.6 billion | An oil price ETF aiming to track WTI |
1. State Street Energy Select SPDR ETF
The State Street Energy Select SPDR ETF (XLE -2.76%) is the largest ETF focused on energy stocks. It holds shares of energy companies in the S&P 500 index. In early 2026, the fund had more than 20 holdings, led by:
- ExxonMobil (XOM -3.65%): 23.4% of the fund's holdings
- Chevron (CVX -2.21%): 17.2%
- ConocoPhillips (COP -4.55%): 7.3%
- EOG Resources (EOG -4.21%): 4.2%
- Williams (WMB +0.41%): 4.2%
The fund uses a market-weight strategy, so assets are highly concentrated at the top. Two of the world's largest integrated energy companies by market cap comprise more than 40% of the fund's total holdings. However, it still offers fairly broad exposure to the entire energy sector, with its top 10 holdings also featuring several refinery stocks, some pipeline stocks, and a large oil-field services company.
Another notable feature of this oil ETF is its relatively low expense ratio of 0.08%. Overall, the State Street Energy Select SPDR ETF offers investors exposure to the largest oil companies for a relatively low cost, making it an excellent option. As the following chart shows, it can deliver a strong performance relative to oil pricing during a robust market:
2. Vanguard Energy ETF
The Vanguard Energy ETF (VDE -3.02%) is a broad-based fund that provides investors with exposure to companies that produce energy products, including oil, natural gas, and coal. The fund held about 105 energy stocks in early 2026. However, because it also has a market-weight strategy, it is highly concentrated at the top. Its five largest holdings include:
- ExxonMobil: 22.6% of the fund's holdings
- Chevron: 15.0%
- ConocoPhillips: 5.8%
- Williams: 3.8%
- SLB (SLB +1.82%): 2.9%
The oil ETF also features a low ETF expense ratio of 0.9%. Given its broader focus on energy stocks beyond those in the S&P 500, the ETF provides investors with even more diversification at a low cost, helping reduce risk. It can also deliver a solid performance compared to oil prices during a strong oil market:
3. Alerian MLP ETF
The Alerian MLP ETF (AMLP -1.04%) is a fund that allows investors to target energy infrastructure midstream master limited partnerships (MLPs). These companies make money by providing midstream services such as operating pipelines or liquefied natural gas (LNG) export facilities.
They tend to generate steadier cash flow than oil and gas producers, making them better oil dividend stocks, as they often pay high yields. In early 2026, the ETF offered a trailing-12-month yield of 7.6%, making it ideal for investors seeking to generate passive income from the oil market. The ETF had 13 holdings in early 2026, led by the following five:
- Plains All American Pipeline (PAA -2.32%): 12.3% of the fund's holdings
- Energy Transfer (ET -0.05%): 12.3%
- Enterprise Products Partners (EPD -1.77%): 12.3%
- Sunoco LP (SUN -2.31%): 12.2%
- Western Midstream Partners (WES -0.76%): 12%
One drawback of the ETF is its relatively high expense ratio of 1.01%. The fees eat into the income generated by the fund's holdings. However, the cost can be worth it because it lets investors own a basket of income-producing energy companies with a single investment.
It's also worth noting that this fund processes the Schedule K-1s issued by the MLPs and sends Form 1099s to its investors. That reduces the tax complexities of investing in MLPs, which can deter some investors. Because it's a yield-focused vehicle, dividend payments make up a sizable portion of the fund's total returns:
4. State Street SPDR S&P Oil & Gas Exploration & Production ETF
The State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP -4.84%) gives investors exposure to integrated oil and gas companies, oil and gas exploration and production companies, and refining and marketing companies. The fund had about 50 holdings in early 2026, led by:
- APA (APA -5.75%): 3.1% of the fund's assets.
- Venture Global (VG -9.90%): 2.9%
- Murphy Oil (MUR -6.23%): 2.8%
- SM Energy (SM -7.48%): 2.8%
- Occidental Petroleum (OXY -5.39%): 2.7%
The oil ETF uses an equal-weight approach, providing broad, diversified exposure to the entire U.S. oil industry by owning roughly equal amounts of each oil stock. Meanwhile, it charges a reasonable fee of 0.35%. These features make it a great option for investors looking for a less-concentrated oil ETF focused on oil and gas companies. It can also produce solid returns relative to oil prices:
How to buy oil ETFs
Here's a step-by-step guide on investing in oil ETFs:
- Open your brokerage account: Log in to your brokerage account where you handle your investments. If you don't have one yet, take a look at our favorite brokers and trading platforms to find the right one for you.
- Search for the oil ETF: Enter the ticker into the search bar to bring up the stock's trading page.
- Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
- Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
- Submit your order: Confirm the details and submit your buy order.
- Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.
Benefits and risks of investing in oil ETFs
Here are some of the benefits of investing in oil ETFs:
- They provide broad exposure to oil stocks.
- They provide a way to benefit from higher prices or rising demand.
- You can generate income from oil dividend stocks and infrastructure operators like MLPs.
On the other hand, here are some risks of investing in oil ETFs:
- Oil prices are volatile and can change direction quickly, which can affect returns.
- Climate change and increased investment in clean energy could affect oil ETF returns over the long term.
- Many of the top oil stock ETFs have a heavy weighting to the largest oil companies, which can impact returns.
Should you invest in oil ETFs?
Oil is vital to the global economy. Because of that, investors should have some exposure to the sector. Oil ETFs make it easier to gain exposure to a volatile but essential sector. Whether you want broad diversification, income, or short-term price exposure, there’s likely an oil ETF that fits your strategy. The key is matching the fund’s structure to your risk tolerance and time horizon.
Related investing topics
FAQ
Investing in oil ETFs: FAQ
About the Author
Matt DiLallo has positions in Chevron, ConocoPhillips, Energy Transfer, and Enterprise Products Partners. The Motley Fool has positions in and recommends Chevron. The Motley Fool recommends ConocoPhillips and Enterprise Products Partners. The Motley Fool has a disclosure policy.
