TLDR
- Shares of Exxon (XOM) and Chevron (CVX) declined more than 3.5% amid a sharp retreat in crude oil prices driven by optimism surrounding U.S.-Iran diplomatic negotiations
- Brent crude petroleum plummeted over 10% to approximately $97.97 per barrel, breaking below the $100 threshold
- West Texas Intermediate crude retreated more than 11% to settle around $90.35 per barrel
- President Trump temporarily halted the “Project Freedom” military initiative in the Strait of Hormuz, pointing to “great progress” in diplomatic discussions
- Major European energy companies also suffered significant losses, with BP plunging over 5% and Shell sliding 4.5%
Major energy sector stocks experienced substantial losses on Wednesday following President Donald Trump’s announcement of a temporary suspension of U.S. military activities in the Strait of Hormuz, attributing the decision to advancing peace negotiations with Iran.
In a late Tuesday evening post on Truth Social, Trump revealed his decision to temporarily halt “Project Freedom,” a military initiative designed to ensure the strategic waterway remained open. The president indicated the suspension would be brief while diplomatic efforts with Tehran progressed.
The announcement triggered a dramatic selloff in oil prices. Brent crude petroleum plummeted more than 10% to settle near $97.97 per barrel, falling beneath the psychologically important $100 level. West Texas Intermediate crude experienced an even steeper decline, dropping over 11% to $90.35 per barrel.
Exxon Mobil shares retreated approximately 3.6% during early market activity. Chevron shares declined roughly 3.3%. These two oil giants represented some of the most significant losers within the domestic energy complex.
Additional U.S. petroleum producers experienced similarly severe downward pressure. Occidental Petroleum topped premarket decliners with a 7.6% plunge. Marathon Petroleum retreated 6.3%, ConocoPhillips declined 5.4%, Devon Energy fell 5.7%, and Diamondback Energy dropped 4.5%.
Occidental simultaneously released quarterly results on Wednesday. While the company reported a substantial increase in adjusted earnings, revenue figures fell short of Wall Street projections for the initial quarter.
APA shares declined 4.6% during the session. The broader S&P 500 index, in contrast, advanced 0.8% as diminishing geopolitical concerns provided support to other market sectors.
European Energy Stocks Also Fell
The downturn extended well beyond American markets. Major European energy corporations experienced comparable losses.
In London trading, BP shares tumbled more than 5% to 542.2p. Shell retreated 4.5% to 3,165.5p. France-based TotalEnergies dropped 5.4% to €75.07 on the Paris exchange.
According to Axios reporting, the Trump administration appeared confident it was nearing agreement on a brief, one-page memorandum of understanding with Iranian officials that could resolve ongoing Middle Eastern conflicts. The publication cited two U.S. government officials and two additional informed sources.
What Triggered the Oil Price Drop
The fundamental catalyst behind the petroleum price collapse was the growing possibility of reduced tensions throughout the Persian Gulf area. A potential peace agreement with Iran would substantially diminish the likelihood of supply chain interruptions through the Strait of Hormuz, a critical chokepoint for international oil transportation.
Trump noted in his post that the current blockade would “remain in full force and effect” during the pause period.
During April, Iran momentarily reopened the Strait of Hormuz before reimposing the closure following U.S. statements that its blockade of Iranian maritime facilities would continue.
As of Wednesday morning, diplomatic negotiations between American and Iranian delegations remained active, though no definitive agreement had been publicly confirmed.
