Energy stocks slide as Iran-U.S. truce sends oil tumbling

Shares in major oil companies fell sharply on Monday as a pause in military hostilities between the United States and Iran sent crude prices tumbling, erasing much of the geopolitical risk premium that had buoyed the energy sector for months.

Oil Plunges on Ceasefire

Brent crude fell more than 5% to around $91.73 a barrel, while U.S. West Texas Intermediate dropped over 5% to $84.45, according to Reuters. Investopedia reported even steeper declines in futures trading, with WTI sinking 8% and Brent plunging over 9%. The selloff followed a Reuters report that Iran would pause military attacks if the U.S. continued its own pause, combined with a Wall Street Journal report over the weekend that President Donald Trump had called off an escalation of the conflict.reuters+1

On the FTSE, BP ↘ 2.00% shares fell 3.4% and Shell ↘ 1.71% lost 1.6%, while Harbour Energy dropped more than 6%. In the U.S., Exxon Mobil ↘ 2.35% and Chevron ↘ 1.86% each declined about 3% in pre-market trading, according to CNBC and Investopedia.investopedia+2

Broader Markets Rally

While energy stocks sank, the rest of the market rallied on relief that oil-driven inflation pressures could ease. S&P 500 futures gained around 1%, Nasdaq futures surged 1.6%, and Dow Jones futures rose more than 1%. The 10-year Treasury yield fell nearly five basis points to 4.64% as traders slightly pared expectations for a Federal Reserve rate hike.investopedia+2

Earnings Week Looms

The selloff comes at a sensitive moment for the oil majors. Shell is due to report second-quarter results on July 30, while BP's next earnings are expected around August 4. BP's trading statement indicated Brent averaged $103.85 per barrel in the second quarter, well above current levels, suggesting that while Q2 results may still reflect elevated prices, forward guidance could face pressure if the ceasefire holds. TD Cowen recently cut its price targets on both Shell and BP, maintaining a preference for Shell heading into earnings season.asktraders+3