Oil prices crashed again Monday morning, with Brent crude futures falling 5.6% and WTI down 5.9% through 10:50 a.m.
As you’d expect, oil stocks are following oil prices lower, with Chevron Corp (NYSE: CVX) stock down 3.1% — but here’s the thing: A 3.1% drop in Conoco stock is only about half the drop in Brent prices, for example. So why isn’t Chevron stock down even more? Peace in the Middle East Let’s start with the obvious: why oil prices are dropping at all today.
Over the weekend, President Trump announced he has reached a peace deal with Iran. The Strait of Hormuz will open toll-free, and the U.S. naval blockade on Iran will simultaneously cease, and “oil will flow on both ends again for the Region, and the World!” Iran confirms the peace deal, affirming that fighting will cease “immediately and permanently.” Oil investors are selling their shares in anticipation that free-flowing Persian Gulf oil will rebalance supply with demand, causing prices — and profits — to drop. This may be exactly what happens next.