Shares shifted sharply as Brent crude rose to $100.71 on September 9 , and USO — the exchange-traded fund that tracks U.S. crude oil futures — jumped to $150.60, up 6.7% in a single week. Oil prices are up more than 8% in September as the U.S. and Iran have traded military strikes for the first time since July. For holders of USO, the question is straightforward: is this a temporary war premium, or the beginning of a structural repricing?
A Seven-Month War With No End in Sight Is the Engine Behind This Rally. The U.S.-Iran conflict is now in its seventh month, raising the risk of oil surging above $120 a barrel as attacks on shipping intensify, according to Goldman Sachs.
Global oil prices averaged $91/barrel in August — $7 higher than July — amid falling global inventories, which have decreased by an estimated 400 million barrels this year. Every dollar added to oil boosts USO's net asset value because the fund holds front-month WTI contracts that move almost in lockstep with crude.
The Strait of Hormuz Remains Half-Shut, Choking Off a Fifth of the World's Oil. In 2025, roughly 20 million barrels per day — about 25% of global seaborne oil — moved through the Strait.
Iran claimed to have attacked two American vessels and eight oil tankers in the Gulf, heightening concerns over further disruption.
Iran-backed Houthi militants also targeted Saudi energy infrastructure, including the 400,000-barrel-a-day Jazan refinery. Each disrupted barrel tightens the global market and directly feeds into higher futures prices that USO reflects.
Goldman's Worst-Case Scenario Is Suddenly Looking More Plausible. Goldman warned Brent could soar above $120 in 2027 if Gulf crude output stays 4 million barrels per day below prewar levels , a scenario that seemed unlikely weeks ago but is gaining credibility. The EIA forecasts Middle East production to remain below pre-conflict averages until at least the second quarter of 2027.
USO Holders Face a Familiar Trap: Winning the Trade, Losing to the Structure. USO rolls its futures contracts monthly, meaning in a steeply rising market — called contango, where future-month oil costs more than the current month — the fund slowly bleeds value even as headlines stay bullish. Investors who rode USO during 2022's Ukraine-driven spike learned this the hard way. Brent's 52-week range spans from $58.66 to $120.88 , underscoring how fast geopolitical premiums can evaporate if diplomacy gains traction or demand slows. The rally is real, but so is the risk of holding a war bet that could reverse overnight.