How to invest in oil for beginners in 2025 

This guide explains how to invest in oil. Follow our step-by-step guide to oil investing, learn the best methods, and discover why oil might be a top investment in 2024.
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Updated on Mar 25, 2024
Reading time 10 minutes

Oil is the fuel that makes the world go round. It’s one of the most important commodities and the one with the most impact on our daily lives, as well as our political arena.

Investing in oil is a simple process and there are several ways to put your money into this popular commodity. This beginner’s guide takes you through the basics of how to invest in oil.

How can I invest in oil?

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There are several options available, ranging from investing in oil stocks to buying oil ETFs or mutual funds. The right approach depends on your personal budget, risk tolerance, and timeline for seeing returns. Here’s a look at the various ways you can invest in oil online.

Buy oil stocks 

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One of the easiest ways to gain exposure to oil is by investing in oil companies. The best oil stocks include companies involved in all, or part of the oil supply chain, from extraction to production to delivery. This includes heavyweights like Exxon Mobil and BP. Oil stocks investing is fairly straightforward and the value of these stocks generally rise and fall in line with the price of oil. 

  • BP (LON:BP). BP is one of the largest oil companies in the world.
  • Exxon Mobile Corporation (NYSE:XOM). Exxon is another global leader in oil production. 
  • Chevron Corporation (NYSE:CVX). Chevron is an American multinational oil company. 

Invest in oil ETFs

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Exchange traded funds (ETFs) are perhaps the easiest way to invest in oil for beginners. ETFs trade on a stock exchange, just like a regular stock. The key difference is ETFs are made up of many different stocks, rather than just one.

With ETFs you’ll gain broad exposure to the price of oil. The value of the stocks that comprise the ETF will usually rise and fall in line with the value of oil.

Use our guide on the best oil ETFs to find the top options for 2025. We’ve also included a few of the largest exchange traded funds below. 

  • United States Oil ETF. (NYSEARCA: USO). USO is the world’s largest oil ETF.
  • Invesco DB Oil Fund (NYSEARCA: DBO). DBO offers a way to invest in oil futures. 
  • WisdomTree Brent Crude Oil ETF (LSE: BRNT). BRNT is an ETC offering exposure to Brent crude oil. 

Invest in oil mutual funds

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Mutual funds operate in a similar way to exchange traded funds, with the main difference being a fund manager decides what the fund invests in. Mutual funds are generally more expensive when compared to ETFs, as you’ll have a management fee to pay. 

While the cost of investing in a mutual fund can be high, the attractiveness of having an oil expert making the decisions in what to invest in can prove to be beneficial for many investors. Many oil mutual funds also include other energy sectors, so if you invest, you’ll gain exposure to the wider industry. 

  • Vanguard Energy Fund Investor Shares (VGENX). Almost half of this fund is invested in the oil and gas industry. 
  • Fidelity Select Energy Portfolio (FSENX). This Fidelity fund has over $2 billion under management.
  • Integrity Mid-North American Resources Fund (ICPAX). ICAPX invests primarily in the North American energy market. 

How to invest in oil online – a step-by-step guide

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Investing in oil is a simple process. Before you begin, you’ll need to register with a trusted online broker to access the oil market. Follow the steps below to learn how to invest in oil.

Step 1. Open an oil investment account

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Choose an online broker that offers a way to invest in the oil market. We recommend eToro as the best oil investing platform. You can invest in a range of oil stocks, oil ETFs, and oil mutual funds. 

Step 2. Choose your oil investment vehicle

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You can invest in oil using various methods. Most investors prefer to invest in oil stocks, ETFs, or funds. You can also directly invest in oil through futures contracts or even physical oil barrels. Our guide below explains more about each option. 

Step 3. Make your investment in oil

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Once you decide how to invest your money into oil, it’s time to make your investment. To do this, simply log into your online brokerage account and use the search bar to find your chosen investment. For example, if you’re planning to invest in a oil ETF, just type its name or ticker symbol and you’ll be taken to its trading page. 

Fill out your order details on the trading page and hit the buy button. You’ll usually be able to decide how many shares you want to buy if using stocks, ETFs, or funds. Alternatively, you can enter a dollar amount and the brokerage platform will take care of the rest. 

Step 4. Monitor your investments

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Regularly review your investment portfolio and its performance. Keep an eye on the oil price to stay updated with the latest changes. If its price drops, you could use it as an opportunity to add to your investment. If it rises, you may want to consider taking some profit. 

Where can I start investing in oil?

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To invest in oil, you need to register with an oil investing platform. These are the best oil trading platforms, ranked by our team of commodity experts according to their value for money, user experience, and security features.

We found 5 commodity trading platforms for users based in

eToro review
4.6
eToro
Min. Deposit $100
Fees 1%
No. assets 3600+
Demo account Yes

eToro review

eToro is a multi-asset investment platform. The value of your investments may go up or down. Your capital is at risk.

Plus500 review
4.5
Plus500
Min. Deposit $100
Fees From 2%
No. assets 2800+
Demo account Yes

Plus500 review

CFD service. 82% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

This information is NOT relevant to EU residents who are to be serviced by EU subsidiaries of the Plus500 Group, such as Plus500CY Ltd, authorised by CySEC (Reg. 250/14). Different regulatory requirements apply in Europe such as leverage limitations and bonus restrictions.

BullionVault
Min. Deposit n/a
Fees -
No. assets n/a
Demo account -

What oil markets can I invest in? 

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Oil is a unique commodity in some senses, because there are many different types of oil that you can invest in. Typically, the various types of oil that are available reflect the place that it comes from, though each has its own unique characteristics and price dynamics.

Here is a closer look at the different types of oil market you can invest in.

  • Brent crude. Brent crude oil is a global benchmark for oil prices and is closely aligned with international supply and demand factors. Sourced from the North Sea, it is known for its high quality and stable production. 
  • West Texas Intermediate (WTI). WTI crude is another primary oil benchmark and is best known for its lighter density and low sulphur content. Extracted from the United States, WTI closely reflects U.S. market dynamics. 
  • OPEC basket. The Organisation of the Petroleum Exporting Countries (OPEC) offers a composite basket of oil prices. These prices represent the collective output of its member nations. OPEC prices provide insights into price trends of OPEC-produced oil. 
  • Dubai crude. Dubai crude oil serves as a reference of oil pricing in the Arab and Asian markets. It is primarily associated with the Middle East and plays a key role in the oil trade of the Asia-Pacific region. 
  • Canadian crude. As its name suggests, Canadian crude represents oil production in Canada, which includes Western Canadian Select (WCS) and Syncrude. Both are essential components of the North American oil energy landscape. 
  • Heating oil. Heating oil is a form of petroleum that’s produced from crude oil, but is typically treated as a separate investment product. You can invest in heating oil, though it is a significantly smaller and less liquid market than that for crude oil.

Why invest in oil?

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There are many reasons why investing in oil can be an attractive option. Oil is a crucial commodity that impacts global economic activity. Despite various attempts to reduce our reliance on fossil fuels, oil plays a vital role in our ability to function as a modern industrial society. Demand is expected to remain strong for the foreseeable future. 

According to the International Energy Agency’s (IEA) World oil outlook, global oil demand is expected to slow slightly in 2024 but is still projected to rise steadily throughout the year. This should bode well for companies that are involved in any stage of the oil production process.

In addition, oil investments can offer investors an easy way to add diversification as oil prices themselves tend to have a low correlation with traditional assets like stocks and bonds. 

Is investing in oil safe?

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Investing in oil can be a profitable investment, however it is important to recognise the inherent risks involved. Oil prices are well known for volatility which can lead to significant price swings and potential losses for investors who fail to manage their risk effectively. 

However, if approached with a well diversified portfolio and prudent risk management, oil investing can be relatively safe. Before you get started, it’s important to use a trusted and regulated commodity platform. 

How much does oil investing cost?

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It depends on the investment vehicle you use and the strategy you choose. Most beginners tend to invest in oil stocks or ETFs, which can be more cost effective when compared to futures or options. When you buy oil stocks or oil ETFs you’ll have to pay brokerage fees and potentially management fees. 

For example, the United States Oil Fund (USO), has an expense ratio of 0.60%, which means you would pay $6 annually for every $1000 invested. 

Here is a comparison of how much it costs to invest in oil assets through a selection of top commodity brokers.

Asset eToro fees Plus500 fees BullionVault fees
Crypto 1% From 2%
Commodities From 2 pips From 0.04%
Forex From 1 pip
Index prices From 0.75 pts From 0.7%
Stocks 0% commission From 0.08%
Stock CFDs 0.15%
ETF CFDs 0.15%
View more > eToro > Plus500 > BullionVault >

Quick answers to key questions

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How much money do you need to start investing in oil?

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If you want to invest directly in oil via futures or physical barrels, substantial capital is required. For more accessible options like ETFs or shares, most brokers will allow you to open an account with a few hundred dollars, or even less in some cases. 

Is oil investing ESG-friendly?

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No, oil investing is generally not considered environmentally friendly and is not aligned with Environmental, Social, and Governance (ESG) principles. Extracting, producing, and consuming oil contributes significantly to greenhouse gas emissions and has a large environmental impact. 

The International Energy Agency (IEA) reports the oil and gas industry accounts for approximately 15% of global energy-related greenhouse gas emissions. Along with the negative impacts of oil drilling and using fossil fuels, oil spills occur often and can cause habitat destruction. 

Are there any sustainable alternatives to oil investing?

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Yes, if you want a sustainable alternative to oil investing there are several options available from within the energy sector. You can look for renewable energy investments such as the best solar stocks, or other clean energy stocks, such as those that are involved in wind farms.

You can also invest in clean or renewable energy companies or green bonds. These types of investments are generally considered more green than oil. 

Can I buy oil barrels?

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Yes, it is possible to buy physical barrels of oil. But it is typically a complex and costly process that is not recommended for retail investors. If you want a physical oil barrel you can purchase one directly from oil producers. While this is possible in theory, the practicalities of direct oil purchases are not worth it for everyday investors. 

Bottom line

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Investing in oil can offer diversification to your portfolio and is a good option for investors seeking exposure to an industry that is crucial to the global economy. As we’ve discussed on this page, there are several ways you can invest in oil. For beginners, the best option is to buy oil stocks or buy oil ETFs.

Before you begin investing in oil, it’s important to weigh the pros and cons and always remember the oil industry is generally more volatile than other markets, so using good risk management is key. 

FAQs

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01

Is investing in oil recommended for beginners?

02

Is it profitable to invest in oil?

03

Can I buy oil shares?

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What is the best time to buy oil?


Sources & references

Prash Raval

Prash Raval

Financial Writer

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Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while running an educational service helping novice traders learn the markets. He has a keen interest in micro and small cap stocks....