Shares of U.S. energy giants surged this week, marking the strongest performance in two years, as fears of a wider conflict in the Middle East between Iran and Israel drove oil prices to $75 per barrel.

The Energy Select Sector SPDR Fund (NYSE:XLE), which tracks 31 major U.S. energy companies, including giants like Exxon Mobil Corp. (NYSE:XOM) and Chevron Corp. (NYSE:CVX), recorded a remarkable 6.4% gain this week.

Investors poured nearly $300 million into the XLE ETF this week, the highest inflow since late July, according to Tradingview data.

Exxon Mobil, the largest U.S. oil company, reached a record high of $125 per share on Friday. The stock posted its sixth consecutive day of gains, ending the week up over 7%, marking its best performance since October 2022.

Oil prices continued their rally, with West Texas Intermediate (WTI) crude recording its fourth straight day of gains, hitting levels last seen in late August. The geopolitical tensions between Israel and Iran have sparked concerns over global oil supply disruptions.

Rising Middle East Tensions, Biden Calls For Measured Israeli Response

Israel promised a strong retaliation after Iran launched more than 180 ballistic missiles on Tuesday. While Israel’s air defense systems successfully intercepted most of the missiles, the attack further intensified the already heightened regional instability.

On Friday, President Joe Biden addressed the escalating crisis during a rare appearance at the White House daily press briefing. He mentioned Israel’s right to defend itself but said the country had not yet decided how it would respond to Iran’s ballistic missile strike.

Biden said he advised Israel against further escalating the conflict, suggesting that Israel might consider alternatives to targeting oil fields in its retaliation.

In his first public appearance since the attack, Iran's Supreme Leader Ayatollah Ali Khamenei defended the strike as “legitimate punishment” for what he called Israeli crimes and urged greater resistance against Israel in the region, Reuters reported.

Iran's deputy commander of the Islamic Revolutionary Guard Corps also issued a stark warning, stating that Iran could target Israeli oil refineries and gas fields if Israel chooses to strike Iranian territory.

This Week’s Top 10 Performing US Energy Stocks

U.S. energy stocks posted sharp gains, with the top performers this week including:

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