Shares of USO, the largest exchange-traded fund tracking short-term WTI crude futures, climbed to $109.65, up 0.7% from the prior close — extending a sharp 6.2% run over just five trading sessions. The move is driven not by broad market strength but by a concentrated spike in crude oil risk premiums tied to Middle East supply threats and Russian refinery damage.
Strait of Hormuz Anxiety Is Putting a Floor Under Crude Prices USO Surges 6% in Five Days as Hormuz Shipping Attack and Russian Refinery Crisis Collide — How Long Can the Fear Premium Last?
Crude oil jumped above $69 a barrel on Tuesday after a projectile struck a Qatar-owned LNG carrier near the Omani coast while exiting the Strait of Hormuz, reaching a one-week high . USO, which tracks the Front Month Light Sweet Crude Oil index and holds predominantly short-term NYMEX futures contracts on WTI crude , followed the move to $109.65 — a 6.2% rally from its July 1 close of $103.27. For USO holders, this is a pure geopolitical risk trade, and the question now is whether the catalysts are temporary or structural.
A Single Projectile Just Tested a Fragile Peace Deal
The attack on commercial shipping heightened concerns over more disruptions to global energy supplies and raised questions over the durability of the US-Iran agreement aimed at preventing attacks in the strategic waterway. That agreement, signed June 17, triggered a 60-day negotiation window to reach a permanent peace deal, but its wording remains controversial, with Tehran arguing it retains joint control of the strait.
US sanctions relief for Iran expires August 21, and "it is unclear whether this opening will survive beyond August." Any collapse would immediately reprice crude — and USO — sharply higher.
Ukraine Has Knocked Out Nearly Half of Russia's Refining Capacity
Simultaneously, Ukraine's military announced that ongoing strikes have disabled 42.7% of Russia's total oil refining capacity, inflicting an estimated $13.5 billion in industry losses since August 2025.
The fuel crisis has spread to at least 78 of Russia's 83 regions , and Moscow is now considering a total ban on diesel exports. Less Russian refining means fewer finished fuel products globally, which pushed the crude crack spread — the gap between crude oil and gasoline prices — to a 4-year high, encouraging refiners worldwide to buy more crude.
The Downside Risk Investors Shouldn't Ignore
Despite the spike, oil remained near its lowest level since late February, as growing supply expectations continued to weigh on the market.
China — the world's largest oil importer — is slashing imports, and Morgan Stanley cut oil forecasts twice in two weeks, warning of a potential glut.
USO's 52-week range spans from $65.99 to $154.08 , meaning the fund sits well below its crisis peak. If diplomacy holds, USO holders face rapid mean-reversion downward.
The Bottom Line: USO's rally is real, driven by two separate supply shocks. But the fund's structure — rolling short-term futures monthly — means holding costs erode returns over time. Traders should treat this as a news-driven spike, not a durable trend, until the August 21 sanctions deadline resolves whether Hormuz stays open or shuts again.