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Exclusive Article 3 ETFs to Avoid as Oil Shock Hits MarketsAuthor: Dan Schmidt. Article Published: 3/12/2026. 
Key Points - Oil-price volatility is pressuring energy-sensitive areas like consumer discretionary, airlines, and European equities.
- Three widely traded ETFs tied to those exposures are showing weakening technicals as the conflict drags on.
- In the near term, investors may want to reduce exposure to the most fuel- and sentiment-sensitive pockets of the market.
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A new energy shock has struck global markets as the U.S.-Israeli war against Iran enters its second week. Oil prices briefly shot above $115 per barrel in the overnight session on Sunday, March 8, before settling back under $90 by Monday evening. Still, oil is up more than 30% in the last month and U.S. gas prices are quickly approaching a $4 average. Energy disruptions ripple across the global economy, but not every country or sector is affected equally. A few market areas could feel more pressure than others, and the funds covering them are ones investors might want to sidestep while the conflict plays out. Sectors and Asset Classes Hit Hardest By Oil Shocks The Fed is counting on the fact that ordinary Americans won't read a 93-page document until it's too late. I've read it and that's why I'm begging you to act while you still can. Get the 4 "Fed-proof" steps right now. When an energy shock like this hits, investors typically rotate into sectors that benefit from higher energy prices — for example, oil and gas — while defensive areas such as consumer staples often hold up better when pump prices rise. But three sectors that frequently suffer more than most are: - Consumer Discretionary - This sector is among the first to feel the squeeze because an oil shock is a very visible signal. Commuters and frequent drivers feel the impact immediately as gasoline becomes more expensive. Every extra dollar spent filling a tank is one less spent on online shopping, dining out, or home improvement. Even consumers who don't drive notice sticker shock at intersections and convenience stores, which dampens economic sentiment. Companies in the consumer discretionary industry also face input costs tied to fuel — shipping, warehousing and logistics — that can rise quickly and are often difficult to pass fully on to customers.
- Airlines - Fuel can account for up to 35% of operating expenses, so spikes in oil inflict immediate pain. Fuel prices can rise overnight while fares and schedules are set months in advance, leaving airlines unable to adjust quickly to higher costs. Airlines also suffer from weaker consumer sentiment; travelers feeling the squeeze may trim discretionary trips or choose cheaper alternatives.
- European Equities - Europe was hit hard in 2022 when Russia's invasion of Ukraine pushed oil above $100/bbl. We discussed Europe's struggles to absorb oil shocks when the fighting began because the region depends heavily on energy imports and has limited domestic capacity. Policy and geography both matter here, and until Europe advances further on decarbonization, it will continue to feel an outsized impact from geopolitical events beyond its borders.
Consider Selling These 3 ETFs as Oil Prices Go Crazy One of the benefits of ETFs is that you can find funds for nearly every corner of the market, and the three sectors above have several liquid options. Here are three funds investors may want to lighten up on while the war continues. Consumer Discretionary ETF XLY Faces Mounting Pressure The Consumer Discretionary Select Sector SPDR Fund (NYSEARCA: XLY) is the largest ETF covering the sector, with more than $22 billion in assets under management (AUM) and a 0.03% expense ratio. But in the current environment its liquidity makes XLY an easy fund to sell, and its biggest holdings — including Amazon Inc. (NASDAQ: AMZN) and Tesla Inc. (NASDAQ: TSLA) — will be vulnerable if consumers delay big-ticket purchases because of rising energy costs. The ETF has fallen sharply over the last few weeks, breaking below both the 50-day and 200-day moving averages and erasing about four months' worth of gains. The Moving Average Convergence Divergence (MACD) confirms bearish momentum and is now consolidating, while prices hover below the 200-day moving average. If the conflict proves prolonged, this consolidation could lead to further selling and new lows for XLY. 
The Vanguard FTSE Europe ETF Loses Momentum as European Stocks Pull Back The Vanguard FTSE Europe ETF (NYSEARCA: VGK) is a roughly $30 billion fund that holds many of Europe's largest public companies, including Roche Holding (OTCMKTS: RHHBY), Novartis (NYSE: NVS), SAP (NYSE: SAP), and LVMH-Moet Hennessy (OTCMKTS: LVMUY). But VGK's exposure is concentrated in some of Europe's most energy-sensitive economies — Germany, France and the U.K. — and the fund is down more than 5% this month, with year-to-date gains shrinking to about 1%. VGK recently broke long-term support at the 50-day moving average, and the next critical level is the 200-day moving average. The MACD highlights the speed and severity of the drawdown, and sellers now control momentum. If VGK can't hold the 200-day, downward pressure is likely to intensify. 
The U.S. Global Jets ETF Is Vulnerable in a Risk-Off Market The U.S. Global Jets ETF (NYSEARCA: JETS) faces several headwinds. It's a smaller, more expensive fund that many investors don't treat as a core holding and may be quick to sell during market stress. In addition to the major U.S. airline stocks, JETS holds travel names such as Expedia Group (NASDAQ: EXPE) and TripAdvisor Inc. (NASDAQ: TRIP), which are sensitive to disrupted routes and weaker consumer travel demand. JETS is down more than 15% in the last month, and bearish momentum shows no sign of easing. The fund breached the 200-day moving average during the decline — the first breach since last August — and the MACD is registering more bearish signals than it has since the Liberation Day tariff debacle last April, suggesting the bottom may not be in yet. 
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