Global energy stocks plunge as US-Iran ceasefire hits oil

U.S. and European energy stocks slid on Wednesday, as a ceasefire to the Middle East conflict punctured the hefty war premium built into oil prices due to fears of supply disruption through the Strait of Hormuz.

Oil fell below $100 per barrel after U.S. President Donald Trump late on Tuesday agreed to a two-week suspension of strikes on Iran, subject to the immediate and safe reopening of the strait.

"The initial market reaction has been significant, but sentiment will remain driven by headline risk," said Achilleas Georgolopoulos, senior market analyst at brokerage XM.

"Any sign that the ceasefire is hanging by a thread can quickly reverse today's improved risk appetite, with oil prices reacting first."

Brent futures LCOc1 hit their lowest in nearly a month at $90.40, retreating from record monthly gains in March driven by supply disruptions related to the conflict.O/R

Brent and U.S. West Texas Intermediate CLc1 have risen 50.8% and 68.5%, respectively, since late February to April 7, when Middle East tensions disrupted the Strait of Hormuz, a key oil shipping corridor.

Matthew Ryan, head of market strategy at global financial services firm Ebury, said volatility is likely to remain elevated as markets assess ceasefire negotiations and shipping activity.

"Should talks falter or activity through the strait remain subdued, oil prices and the dollar could reverse course fairly quickly," Ryan said.

Oil slide punctures conflict-driven rally

Energy equities, which had surged earlier in the year on higher oil prices, led broader market declines.

Shares of Exxon Mobil XOM.N and Chevron CVX.N fell more than 6%, while producers including Occidental Petroleum OXY.N, Devon Energy DVN.N, Diamondback Energy FANG.O and ConocoPhillips COP.N slid between 7.7% and 9%. Oilfield services companies and refiners fell broadly.

Liquefied natural gas exporters, which had benefited from elevated spot prices during the conflict, were among the worst hit, with Venture Global VG.N and Cheniere Energy LNG.N down 17% and 7%, respectively.

The pullback follows a strong first quarter for the sector, when soaring oil prices pushed the S&P 500 Energy Index .SPNY up more than 37%, making it the top-performing sector in the S&P 500 index .SPX, which fell about 4.6% over the same period.

Ashley Kelty, an analyst at Panmure Liberum, said the pause may allow markets more time to digest the fallout of the conflict and price in the damage to facilities and time needed to ramp-up production.

LNG exporters, European majors hardest hit

In Europe, shares of TotalEnergies TTEF.PA, Shell SHEL.L, BP BP.L, Eni ENI.MI, and Repsol REP.MC fell between 5.5% and 8%.

Norway's Equinor EQNR.OL slumped 13.7%, while Var Energi VAR.OL and Aker BP AKRBP.OL lost 13.2% and 2%, respectively.

Europe's oil & gas sector .SXEP was the worst performer, shedding 3.3% and on track for its biggest daily fall since April 2025. The index is still up 31% so far in 2026.

Elsewhere, falling oil prices lifted airline shares, with United Airlines UAL.O, Delta Air Lines DAL.N and American Airlines AAL.O each gaining over 10%, offering relief after weeks of pressure from higher fuel costs.  — Reuters