How to gain exposure to oil in Singapore

What happened?

Oil prices have surged sharply in recent weeks following a major escalation in the Middle East conflict. 

After trading at around US$65 per barrel earlier this year, the global oil supply faced disruption triggered by the blockade of the Strait of Hormuz, one of the world’s most critical energy chokepoints. 

As a result, Brent crude climbed above US$110 per barrel, the highest levels in years. 

With oil prices rising and volatility remaining elevated, many investors are looking at oil, whether as a potential opportunity or a risk to navigate.

Previously, we shared how to buy gold in Singapore, another asset class impacted by the Middle East conflict. 

As an investor in Singapore, you might also be thinking about whether oil deserves a place in your portfolio.

Before you invest, let’s explore the different ways to gain exposure to oil and understand the key benefits and risks involved.

How to gain exposure to oil in Singapore?

There are several ways to invest in or trade oil, depending on your investment goals and how hands-on you want to be.

You can buy oil ETFs on the stock exchange, trade oil futures or CFDs, invest in oil company stocks, or use options on oil-related instruments.

Each method comes with different levels of risk, liquidity, and cost, so it is important to understand what you are getting into before committing any capital.

Oil ETFs

Oil ETFs are one of the most accessible ways for Singapore investors to gain exposure to oil prices.

You can buy and sell them just like any other stock through brokerage platforms such as Tiger Brokers, moomoo, and Longbridge, without needing to manage futures contracts or deal with physical delivery.

There are broadly two types of oil ETFs. 

Some track the price of crude oil directly by holding oil futures contracts. 

Others invest in the shares of oil and gas companies, giving you indirect exposure to oil prices through corporate earnings.

Here are some popular oil ETFs:

Source: Fund managers' websites. Expense ratios as of March 2026.

Pros of investing in oil ETFs:

• Accessibility: You can gain oil exposure without needing a futures trading account or dealing with contract rollovers yourself.
• Diversification: Company-based oil ETFs spread your exposure across multiple oil majors, reducing single-stock risk.
• Ease of trading: You can buy or sell ETFs during market hours, offering flexibility and liquidity.

Cons of investing in oil ETFs:

• Contango drag: Some oil ETFs invest in futures rather than physical oil, and if longer-dated contracts are priced above spot, returns can gradually erode over time even if oil prices do not rise.
• Management fees: Annual expense ratios may reduce long-term returns.
• Indirect tracking: Futures-based ETFs may not perfectly track the spot price of oil due to rolling costs and market structure.

Oil-related stocks

Another way to gain oil exposure is to invest in companies whose earnings are closely tied to oil prices.

These broadly fall into a few categories: upstream producers (exploration and extraction), integrated oil majors, oil services companies, and refiners.

When oil prices rise, upstream producers and integrated majors typically see profit margins expand. 

However, oil stocks also carry company-specific risks such as operational issues, cost inflation, political risk in the countries they operate in, or poor capital allocation, which may hurt returns even when oil prices are high.

Some oil and energy stocks include:

Pros of investing in oil stocks:

• Dividend income: Many large oil majors pay regular dividends, offering income alongside potential capital appreciation, unlike futures or ETFs focused purely on price.
• Operational leverage: When oil prices rise significantly, the earnings of oil producers can rise disproportionately, potentially outperforming oil itself.
• Accessible: Buying stocks through a brokerage account is straightforward for most investors.

Cons of investing in oil stocks:

• Company-specific risk: Stock performance depends on more than just oil prices; management decisions, geopolitical exposure, and production costs all play a role.
• Volatility: Oil stocks can be more volatile than oil ETFs, particularly for smaller exploration companies.
• Energy transition risk: Long-term structural pressure from the shift toward renewable energy may weigh on valuations of oil companies over time.

Looking to get started with oil stocks? Compare the best brokerages in Singapore for the fees, markets available, and promotions across different brokers to find one that fits your investing needs.

Oil Futures

Oil futures are contracts that obligate the buyer to purchase oil at a predetermined price on a specified future date. They are the most direct way to gain exposure to oil prices.

In Singapore, you can trade oil futures through brokers that provide access to exchanges such as the Chicago Mercantile Exchange Group (CME Group), which lists WTI crude oil futures, or the Intercontinental Exchange (ICE), which lists Brent crude futures.

Pros of trading oil futures:

• Direct price exposure: Futures track oil prices closely, without the ETF contango drag issue.
• Leverage: You can control a large notional position with a relatively small margin deposit, amplifying potential gains.
• Hedging tool: Companies and investors with existing oil-related exposures can use futures to hedge against adverse price moves.

Cons of trading oil futures:

• Complexity: Futures contracts expire and need to be rolled over if you want to maintain a long-term position, which involves additional cost and active management.
• Leverage risk: The same leverage that amplifies gains can rapidly magnify losses, sometimes beyond your initial investment.
• High capital requirements: Margin requirements for a single futures contract can be substantial, making this less accessible for smaller investors.

If you’re new to futures, you can learn more about futures here, and how to use futures to hedge a portfolio here

Oil CFDs

Contracts for Difference (CFDs) allow you to speculate on oil price movements without owning any underlying asset or dealing with futures contract expiry.

CFDs are popular among active traders in Singapore because they offer flexibility. 

You can go long if you expect oil prices to rise, or short if you expect them to fall, with relatively low minimum capital requirements.

Pros of trading oil CFDs:

• Trade both ways: You can profit from both rising and falling oil prices by taking long or short positions.
• No expiry management: Unlike futures, most oil CFDs are rolling contracts, so you don't need to manage contract rollovers manually.
• Leverage: CFDs allow you to gain larger exposure with a smaller upfront investment.
• Hedging tool: You can use a short CFD position to hedge oil-related exposures elsewhere in your portfolio.

Cons of trading oil CFDs:

• Overnight financing costs: Holding CFD positions overnight typically incurs a daily financing charge, which adds up over time.
• Leverage risk: Leverage amplifies both gains and losses, and losses can exceed your initial deposit.
• No ownership: You do not own any physical oil or shares in any company.
• Counterparty risk: Your CFD position is with the broker, so the financial strength of your broker matters.

Looking to trade oil using CFDs?

Different CFD platforms offer varying spreads, tools, and risk management features that can impact your trading experience.

👉 Compare the best CFD trading platforms in Singapore before you get started

Why invest in oil?

Oil remains one of the most strategically important commodities in the world.

It powers transportation, manufacturing, and energy production globally. 

As a result, oil prices have a direct bearing on inflation, corporate earnings across multiple industries, and the broader economic cycle.

For investors, oil can serve several purposes in a portfolio.

First, oil has historically acted as a partial hedge against inflation. 

When energy costs rise, oil prices typically rise too, which can help protect the purchasing power of a portfolio.

Second, oil has a relatively low long-term correlation with equities in certain market environments, particularly during supply-driven oil shocks, which can provide some diversification benefit.

Third, for investors with significant exposure to industries negatively affected by high oil prices such as airlines, shipping, or consumer goods, oil exposure can serve as a natural hedge.

Key factors affecting oil prices

Oil prices are influenced by a complex mix of supply, demand, and geopolitical factors.

#1 – OPEC+ supply decisions 

The Organisation of the Petroleum Exporting Countries and its allies (OPEC+) collectively control a significant share of global oil production. 

Their decisions to cut or increase output have an outsized influence on oil prices.

#2 – Global economic growth 

Oil demand is closely tied to economic activity. 

When major economies, particularly the US, China, and Europe, are growing strongly, demand for oil rises and prices tend to move higher. 

A slowdown or recession, on the other hand, tends to weigh on oil prices.

#3 – Geopolitical tensions 

Conflicts or instability in major oil-producing regions such as the Middle East can disrupt supply and push prices sharply higher. 

Political risk remains a permanent feature of the oil market.

#4 – The US dollar 

Like gold, oil is primarily priced in US dollars. 

A weaker dollar generally makes oil cheaper for non-US buyers, supporting demand and prices. A stronger dollar tends to weigh on oil prices.

#5 – Energy transition and policy 

The global shift toward renewable energy and tightening environmental regulations are structural headwinds for long-term oil demand. 

Policy changes such as carbon taxes or subsidies for electric vehicles can influence both demand forecasts and investor sentiment toward oil-related assets.

#6 – US shale production 

The United States has become one of the world's largest oil producers, primarily through shale extraction. 

When oil prices rise and make shale production economically attractive, US output tends to increase, which can put a ceiling on how far prices can run.

Risks of investing in oil

While oil can provide diversification and inflation protection, it comes with meaningful risks that investors should understand.

#1 – Price volatility 

Oil is one of the most volatile major asset classes. Prices can move dramatically in a short period — driven by unexpected geopolitical events, supply disruptions, or sudden shifts in demand expectations.

#2 – Contango drag for ETF investors 

Investors holding oil futures ETFs over the long term may find that contango, where future prices are higher than spot prices, gradually erodes their returns, even if oil prices are broadly flat or rising.

#3 – No income generation 

Direct oil exposure through futures, CFDs, or commodity ETFs does not generate dividends or interest. Returns depend entirely on price movement.

#4 – Leverage risks 

For those using futures, CFDs, or options with leverage, losses can exceed the initial amount invested. 

It requires careful risk management and a clear understanding of your downside.

#5 – Long-term structural decline risk 

The global energy transition poses a long-term structural risk to oil demand. 

While the pace of this shift remains uncertain, it is a factor that long-term investors should consider when sizing their oil exposure.

#6 – Geopolitical and regulatory risk 

Sudden policy changes, export restrictions, or sanctions on major producers can cause rapid and unpredictable price swings.

What would Beansprout do?

If you are looking to add oil exposure to your portfolio, it is worth thinking carefully about your purpose, whether it is diversification, inflation hedging, or an active trading position, before choosing the right instrument.

For most long-term investors, oil ETFs backed by energy company stocks (like XLE or IXC) may offer a more practical approach than pure futures-based products that are more complex and require active management. 

For more active traders or those looking to hedge, oil CFDs or futures offer direct price exposure and the ability to go short, but require a higher level of risk management.

Track the latest price of crude oil in Singapore here.

If you are new to futures, our futures guide covers the basics of how futures work, including leverage and margin. 

If you are thinking about hedging, our guide to hedging with CME futures looks at how to manage exposure, position sizing and monitoring over time.

Whatever route you choose, keep in mind that oil should typically form only a modest portion of a well-diversified portfolio, given its inherent volatility and the structural uncertainties facing the energy sector over the coming decades.

Looking to trade oil through CFDs? Compare the best CFD trading platforms in Singapore and find one that suits your strategy.

Prefer to invest in oil companies or oil ETFs for the longer term? Compare the best online brokerages in Singapore to find a platform that fits your investing needs.

How are you thinking about oil exposure in your portfolio? Share your thoughts in the comments, or join the discussion in our Telegram group.

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