What is the largest oil ETF?

The State Street Energy Select Sector SPDR Fund is the largest ETF focused on oil and gas exploration and production. The fund had more than $35 billion in assets under management (AUM) in mid-2026, consisting of energy stocks listed in the S&P 500 index.

What is a good oil and gas ETF?

A good ETF for those seeking balanced exposure to the U.S. oil and gas sector is the SPDR S&P Oil & Gas Exploration & Production ETF. The fund had a roughly equal weighting across 50 oil and gas stocks as of mid-2026, distinguishing it from other top oil and gas ETFs that use market-weighting. Their approach results in relatively high concentration in the largest oil and gas stocks, tying returns to the performance of those larger companies.

Is an oil ETF a good investment?

An oil ETF can be a good investment. They give investors broad exposure to the oil market in a single investment. That helps mitigate the risks of investing in oil stocks that underperformed their peers due to company-specific problems such as mismanagement or excessive debt.

What is the best way to invest in oil?

The best way to invest in oil is through either a large integrated oil company, such as ExxonMobil, or an oil ETF. Either option provides investors with diversified exposure to the entire oil market value chain (production, midstream services, and refining and chemicals). Oil ETFs offer the most diversification since they own many oil stocks, helping to mitigate the risk that an investor is right on their thesis (oil prices will rise) but selects the wrong vehicle (an underperforming oil stock) to express that view.

What are the best crude oil ETFs?

The best crude oil ETFs are the State Street Energy Select SPDR Fund, the Vanguard Energy ETF, the Alerian MLP ETF, the SPDR S&P Oil & Gas Exploration & Production ETF, and the United States Oil Fund LP. Each provides investors with exposure to crude oil either directly (United States Oil Fund) or indirectly through oil stocks. These ETFs should rise with oil prices, and oil-focused ETFs may outperform crude prices.

Do oil ETFs pay dividends?

Yes, most oil ETFs pay dividends. Oil ETFs focused on MLPs, such as the Alerian MLP ETF, offer higher dividend yields (over 7.5% in mid-2026).

5 Best Oil ETFs for 2026 and How to Invest

Take a look at some of the top oil ETFs and consider whether they deserve a spot in your portfolio.

By Matthew DiLallo – Updated Jul 7, 2026 at 1:27 PM EST | Fact-checked by Frank Bass

+Fool.comon

Key Points

Oil ETFs offer diversified exposure to the oil market, reducing risk compared to investing in individual stocks.
The State Street Energy Select SPDR ETF and the Vanguard Energy ETF focus on large, stable energy stocks with lower volatility.
The Alerian MLP ETF provides excellent income with a 7.7% yield by focusing on companies that provide midstream services.

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.

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A person looking at an oil pump with the sun setting in the background. — Image source: Getty Images.

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5 top oil ETFs for 2026

Dozens of ETFs focus on the oil sector. They include those focused on:

Oil and gas exploration and production
Energy infrastructure (including master limited partnerships or MLPs)
Oil futures

Here are some of the best ones across the oil patch for investors to consider this year:

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Ticker Information Table
Name and ticker	Current price
Select Sector SPDR Trust - State Street Energy Select Sector SPDR ETF (NYSEMKT:XLE)	$58.50
Vanguard World Fund - Vanguard Energy ETF (NYSEMKT:VDE)	$165.52
Alps ETF Trust - Alerian Mlp ETF (NYSEMKT:AMLP)	$54.40
SPDR Series Trust - State Street SPDR S&P Oil & Gas Exploration & Production ETF (NYSEMKT:XOP)	$173.83
United States Oil Fund (NYSEMKT:USO)	$128.85

Data as of Jul 21, 2026. Showing 5 of 5 total entries.

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XLE vs brent July 2026 — Image source: YChart.

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2. Vanguard Energy ETF

The Vanguard Energy ETF (VDE +1.25%) is a broad-based fund that provides investors with exposure to companies that produce energy products, including oil, natural gas, and coal. The fund had about $11.8 billion in AUM across 111 energy stocks in mid-2026. However, because it also has a market-weight strategy, it is highly concentrated at the top. Its five largest holdings include:

ExxonMobil: 22.0% of the fund's holdings
Chevron: 14.2%
ConocoPhillips: 5.8%
Williams (WMB -1.08%): 3.6%
SLB (SLB +0.43%): 3.5%

The oil ETF also has a low expense ratio of 0.9% and can provide income (a 2.7% yield in mid-2026).

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 strong performance compared to oil prices over the longer term:

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VDE vs Brent July 2026 — Image source: YCharts.

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3. Alerian MLP ETF

The Alerian MLP ETF (AMLP -0.13%) 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 mid-2026, the ETF offered a trailing-12-month yield of 7.7%, making it ideal for investors seeking to generate passive income from the oil market. The ETF had over $13 billion in AUM across 14 holdings in mid-2026, led by the following five:

Sunoco LP (SUN +0.15%): 12.6% of the fund's assets
Energy Transfer (ET -0.15%): 12.4%
MPLX (MPLX -1.12%): 12.2%
Western Midstream Partners (WES -0.04%): 12.0%
Plains All American Pipeline (PAA -0.08%): 12.0%

One drawback of the ETF is its relatively high expense ratio of 1.01%. That's due in part to income taxes, as this fund processes the MLPs' Schedule K-1s and sends investors a Form 1099 instead. 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:

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AMLP total return July 2026 — Image source: YCharts.

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4. State Street SPDR S&P Oil & Gas Exploration & Production ETF

The State Street SPDR S&P Oil & Gas Exploration & Production ETF (XOP +2.23%) gives investors exposure to integrated oil and gas companies, oil and gas exploration and production companies, and refining and marketing companies. The fund had over $3 billion in AUM across 51 holdings in mid-2026, led by:

PBF Energy (PBF +3.45%): 3.2% of the fund's assets.
Delek U.S. Holding (DK +3.94%): 2.9%
Texas Pacific Land (TPL +3.21%): 2.9%
Par Pacific Holding (PARR +3.66%): 2.9%
HF Sinclair (DINO +1.42%): 2.9%

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% and offers a dividend yield of more than 2%. 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 strong returns compared to oil prices:

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XOP vs WTI July 2026 — Image source: YCharts.

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5. United States Oil Fund LP

The United States Oil Fund (USO +2.66%) is an ETN that provides investors with more direct exposure to oil prices. It invests in futures contracts based on WTI prices. This approach allows investors to make a directional bet on oil prices without engaging in futures trading or risking that an oil stock will underperform crude oil prices. The fund had over $2 billion in total net assets in mid-2026.

However, the fund has a rather hefty total expense ratio of 0.7%. The costs of rolling futures contracts can also eat into the fund's returns over the long term, causing it to lag oil prices.

Because of these performance drags, the oil ETF isn't an ideal long-term investment. Instead, it's best for making a short-term wager on crude oil prices since it tends to do a good job of tracking WTI price movements over short periods:

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USO vs WTI July 2026 — Image source: YCharts.

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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.

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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.

Methodology: How these ETFs were chosen

Many ETFs invest in the oil sector. This group stood out for their combination of size, low costs, and investment strategies. Those features position these funds to deliver the best risk-adjusted returns among oil ETFs.

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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.

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Investing in oil ETFs: FAQ

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About the Author

Matt DiLallo has been a contributing Motley Fool stock analyst specializing in the energy, industrials, and real estate sectors since 2012. He also covers dividend-paying stocks, pre-IPO companies, ETFs, and other investing topics. He holds an MBA from Liberty University.

TMFmd19

@MatthewDiLallo

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.

5 Best Oil ETFs for 2026 and How to Invest

Take a look at some of the top oil ETFs and consider whether they deserve a spot in your portfolio.

Key Points

5 top oil ETFs for 2026

2. Vanguard Energy ETF

3. Alerian MLP ETF

4. State Street SPDR S&P Oil & Gas Exploration & Production ETF

5. United States Oil Fund LP

How to buy oil ETFs

Benefits and risks of investing in oil ETFs

Methodology: How these ETFs were chosen

Should you invest in oil ETFs?

Related investing topics

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3 Best Nuclear Energy ETFs for 2026 and How to Invest

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Investing in oil ETFs: FAQ

About the Author

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Investing in oil ETFs: FAQ

What is the largest oil ETF?

What is a good oil and gas ETF?

Is an oil ETF a good investment?

What is the best way to invest in oil?

What are the best crude oil ETFs?

Do oil ETFs pay dividends?

How to buy oil ETFs

Benefits and risks of investing in oil ETFs

Methodology: How these ETFs were chosen

Should you invest in oil ETFs?

Related investing topics

5 top oil ETFs for 2026

1. State Street Energy Select SPDR ETF

3. Alerian MLP ETF

2. Vanguard Energy ETF

5. United States Oil Fund LP

4. State Street SPDR S&P Oil & Gas Exploration & Production ETF