Oil ETN Returns Double as Middle East War Sends Crude Soaring

International oil prices have surged amid the Middle East conflict, drawing a flood of investor capital into domestic crude oil exchange-traded notes (ETNs).

With forecasts pointing to continued oil price gains, individual investors are actively pouring money into products that track crude oil futures. Since retail investors cannot directly invest in physical crude oil, ETNs have emerged as an alternative investment vehicle.

According to the Korea Exchange on the 15th, average daily trading volume for the "KB S&P Leveraged WTI Crude Oil Futures ETN B" reached 2.947 billion won between March 3-13, following the outbreak of war between the U.S.-Israel alliance and Iran. This represents a more than fivefold increase from the 573 million won average during the previous two weeks (February 19-27).

Trading volume spiked to 6.466 billion won on March 10, when international oil prices exceeded $100 per barrel for the first time since July 2022. This marked the highest level in approximately nine months since the 7.043 billion won recorded on June 17 last year.

The ETN's price also surged. From 24,950 won on February 27 before the war, it more than doubled to 52,945 won by March 13.

Other crude oil ETNs showed similar trends. During the same period, Meritz Solactive 2X WTI Crude Oil Futures ETN(H) rose 105.6%, Samsung Leveraged WTI Crude Oil Futures ETN gained 113.4%, and Hana S&P Leveraged WTI Crude Oil Futures ETN B climbed 115.9%, all roughly doubling in value.

Conversely, inverse products betting on falling oil prices plummeted. KB S&P Inverse 2X WTI Crude Oil Futures ETN B dropped 58.6%, Meritz Solactive -2X WTI Crude Oil Futures ETN(H) fell 61.0%, and Hana S&P Inverse 2X WTI Crude Oil Futures ETN B declined 59.5%—effectively cutting their values in half.

Securities analysts expect international oil prices to maintain their upward trajectory as the Middle East conflict shows signs of becoming prolonged. However, they advise investors to exercise caution, warning that geopolitical tensions could amplify price volatility.

"The front lines are expanding, with Iranian cargo ships being hit off the UAE coast in addition to tankers passing through the Strait of Hormuz, and the possibility of a prolonged war is growing," said Oh Jae-young, a researcher at KB Securities. "Despite market stabilization efforts including U.S. President Donald Trump's statements suggesting an imminent end to the war and the possibility of strategic petroleum reserve releases by the International Energy Agency (IEA), international oil prices will face upward pressure until an actual lifting of the Strait of Hormuz blockade is confirmed."