INDO, BATL, USO Rally Overnight As Crude Tops $100 On Hormuz Shock — Is Oil Retail’s Next Meme Trade?

The Future Fund’s Gary Black said higher fuel costs could hurt consumer spending and potentially complicate the Federal Reserve’s rate-cut path.

• Crude prices blasted past $100 a barrel amid disruptions in the Strait of Hormuz and escalating tensions in the Middle East.
• Trump said higher oil prices are a “very small price to pay” for global security, while Iran named Mojtaba Khamenei as its new supreme leader.
• The Kobeissi Letter noted record inflows of $36 million into USO on Friday and $82 million over five days.

Oil stocks surged in overnight trading on Sunday as crude prices rocketed past $100 a barrel following disruptions in the Strait of Hormuz, with analysts pointing to record retail inflows into oil funds as traders piled into the rally.

Shares of United States Oil Fund (USO), Indonesia Energy (INDO), and Battalion Oil (BATL) surged nearly 20% in overnight trading. 

On Friday, West Texas Intermediate (WTI) crude oil futures posted their largest weekly gain on record, surging 35%.

Oil Surges On Hormuz Supply Shock

Brent crude jumped as much as 20% to $111.04 a barrel, its highest level since July 2022, while WTI climbed 22% as tensions in the Middle East threatened global supplies. Shipping through the Strait of Hormuz, which carries about a fifth of the world’s oil, remained largely halted, while Kuwait and the UAE  began cutting output and Iraq started shutting down production.

U.S. President Donald Trump said on Truth Social that “Short term oil prices, which will drop rapidly when the destruction of the Iran nuclear threat is over, is a very small price to pay for U.S.A., and World, Safety and Peace. ​​ONLY FOOLS WOULD THINK DIFFERENTLY!”

Meanwhile, Iran appointed Mojtaba Khamenei, the son of the late Ayatollah Ali Khamenei, as its new supreme leader.

Ryan Detrick, chief market strategist at Carson Group, said on X, quoting market veteran Jeff Saut, former chief investment strategist at Raymond James, that “surprises in bull markets tend to happen to the upside.”

Gary Black Flags Inflation Risk From Oil

Gary Black, managing partner at The Future Fund, said on X that higher oil prices can ripple through the economy, starting with fuel costs for consumers. “If all of a sudden, consumers have to pay more every week to fill up their gas tanks, it'll likely affect how they feel about their finances and may cause them to cut back spending in other areas,” he said. 

He added that rising energy costs could also affect monetary policy, noting that an energy-driven inflation shock could make the Federal Reserve hesitant to cut rates. Black warned that any new risks cause equities to “swing wildly,” adding that while past oil crises have often been short-lived, investors are concerned the current conflict could drag on.

Retail Buying Surges In Oil Funds

The Kobeissi Letter said on X that retail inflows into USO hit a record $36 million on Friday, surpassing the previous peak set during the pandemic shutdown in April 2020. Five-day retail purchases climbed to $82 million, also a record and well above the $67 million peak during the 2020 oil crash, the commentator said, citing Vanda Research data. “Is oil the next meme theme for retail investors?” it posted.

The firm added that U.S. oil futures are now on-track to rise about 60% this month, potentially marking the largest monthly gain in history.

Fuel Prices Climb As Oil Rally Spreads

Meanwhile, Patrick De Haan, an analyst at GasBuddy, said crude rose to about $107 per barrel late Sunday after touching $110 as tensions in the Middle East added a “significant geopolitical risk premium” to energy markets.

The U.S. national average gasoline price stood at $3.447 per gallon on Sunday evening, up more than $0.5 from a week earlier. De Haan said gasoline could climb to $3.75-$3.95 this week and sees “roughly an 80% chance” prices reach $4 per gallon nationally within a month.

Diesel prices have surged even faster, with the national average rising to $4.597 per gallon. De Haan said diesel now has “roughly an 85% chance” of reaching $5 per gallon if the oil rally continues.

How Did Stocktwits Users React?

On Stocktwits, retail sentiment for USO, INDO, BATL was ‘extremely bullish’ amid ‘extremely high’ message volume.

One user said, “TACO [Trump Always Chickens Out] is coming mark it. If Trump gonna let Oil rush and interest hike, plus market crash kick him out of white house, I'm gonna be speechless.” 

Another user expects crude to hit the $250 level by Thursday.

While USO ETF has risen 57% so far this year, INDO has nearly doubled and BATL has surged over 1,800% over the same period.

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