Crude oil exchange-traded notes (ETNs) in the Korean market dominated this month's top-performing securities as Middle East tensions reignited and international oil prices surged. The Meritz Leverage WTI Crude Futures ETN (H) closed at 51,490 won as of the 24th, a 69% jump from 30,465 won at the end of last month, according to the Korea Exchange on the 26th. The rally was driven by escalating US-Iran conflict—including Iran's attacks on ships in the Strait of Hormuz, resumed US airstrikes, and the Houthi rebels' declaration of a blockade at the Bab el-Mandeb Strait—which fueled fears of crude oil supply disruptions. Seven of the top 10 ETNs by monthly returns were oil-linked products, vastly outperforming the KOSPI's -21% return over the same period.
Korean Oil ETNs Post Double-Digit Monthly Gains
The Meritz Leverage WTI Crude Futures ETN (H), which tracks twice the daily returns of West Texas Intermediate (WTI) crude futures listed on the New York Mercantile Exchange (NYMEX), rose 69% from the end of last month to 51,490 won as of the 24th. Other leveraged oil ETNs recorded similar gains: Shinhan Bloomberg Leverage WTI Crude Futures ETN B climbed 61.1%, Samsung Leverage WTI Crude Futures ETN gained 60.8%, Hantoo Leverage WTI Crude Futures ETN B rose 60.8%, and KB S&P Leverage WTI Crude Futures ETN B advanced 60.6% over the same period. These returns far exceeded the KOSPI's -21% decline this month.
US-Iran Conflict Resumes After June MOU Breakdown
The surge in oil prices stems from renewed US-Iran military confrontation. War broke out at the end of February, followed by a ceasefire in early April and a memorandum of understanding (MOU) signed in mid-June. However, the truce effectively collapsed after Iran launched successive attacks on vessels in the Strait of Hormuz and the US resumed airstrikes. Recently, pro-Iran Yemeni Houthi rebels declared a blockade of the Bab el-Mandeb Strait at the entrance to the Red Sea, and President Trump hinted at the possibility of a large-scale attack, heightening concerns over Middle East crude oil supply disruptions.
WTI and Brent Crude Prices Jump Over 30%
On the 23rd (local time), the September delivery WTI crude futures closed at $92.19 per barrel, a 33% surge from the end of last month. Brent crude reached $100.69 per barrel, crossing the $100 mark for the first time in about two months and posting a 38% gain over the same period.
Refinery Stocks Surge on Oil Price Rally
The rally spread to refinery-themed stocks. Korea Petroleum rose 10% this month, while S-Oil jumped 42% and Heung-Gu Petroleum surged 49%.
Goldman Sachs Forecasts Brent at $120 in Q4
Goldman Sachs stated in a report that if disruptions at the Bab el-Mandeb Strait continue, Brent crude could exceed $120 per barrel in the fourth quarter and average $100 next year. Wi Jae-hyun, a researcher at Kyobo Securities, noted that "if the strait is blocked for an extended period, the impact of a second shock will be greater than in March." He added, "If geopolitical risks do not subside, international oil prices face the risk of rising to a maximum of $160 per barrel within the third quarter."
FAQ
What caused Korean oil ETNs to surge this month?
Korean oil ETNs surged due to Middle East tensions, including the US-Iran conflict, Iran's attacks on ships in the Strait of Hormuz, resumed US airstrikes, and the Houthi rebels' declaration of a blockade at the Bab el-Mandeb Strait. These events raised fears of crude oil supply disruptions, driving WTI futures up 33% and Brent crude up 38% from the end of last month.
How much did the Meritz Leverage WTI Crude Futures ETN (H) gain?
The Meritz Leverage WTI Crude Futures ETN (H) rose 69% from 30,465 won at the end of last month to 51,490 won as of the 24th, according to the Korea Exchange on the 26th.
What did Goldman Sachs forecast for Brent crude prices?
Goldman Sachs stated in a report that if disruptions at the Bab el-Mandeb Strait continue, Brent crude could exceed $120 per barrel in the fourth quarter and average $100 next year.
