"Recent reports describe hopes of an early end to the Iran conflict leading to lower crude oil and food-based commodity prices, with President Trump actively negotiating regarding the Strait of Hormuz and NATO. That diplomatic activity is creating the de-escalation momentum pulling oil prices lower today."
"WTI crude oil had climbed from $71.13 per barrel on March 2 to over $100, before retreating back under $100 today. The Iran conflict was the primary driver of that climb, and any genuine resolution would reduce the structural justification for prices near the $100 level."
"Guggenheim Partners had previously warned that oil remaining near $100 per barrel for several months could trigger a 10% selloff in U.S. equities, with their base case calling for oil to ease to $70. Morgan Stanley projected WTI to average $80 per barrel in 2026."
Exxon Mobil and Chevron shares dropped 5% amid reports of potential peace in the Iran conflict, which is unwinding the geopolitical risk premium that had elevated oil prices. Both stocks had previously performed well, with XOM up 41.95% and CVX up 37.09% year-to-date. The decline serves as a reminder that a significant portion of their gains was based on a war premium. As diplomatic efforts continue, oil prices are expected to decrease, with projections suggesting a return to around $70 to $80 per barrel.
Read at 24/7 Wall St.
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