Shares of leading U.S. oil producers Exxon Mobil (XOM), Chevron (CVX), and ConocoPhillips (COP) plunged in Wednesday’s pre-market trading. This followed President Donald Trump’s announcement late Tuesday of a two-week ceasefire in the U.S. and Israel’s war on Iran, which sent oil prices below $100 per barrel.
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Oil Prices Plunge on Conditional Ceasefire
As of the time of writing, the global crude oil futures benchmark BZ (CM:BZ) was down over 10% to $96.73, while the key U.S. oil gauge West Texas Intermediate (CM:CL) fell by almost 14% to $95.45.
The drop in Big Oil stocks comes as shares in Exxon Mobil, Chevron, and ConocoPhillips have jumped by about 37%, 34%, and 42%, respectively, since the start of the year. Crude oil producers have benefited from higher oil prices due to the conflict in the Middle East.
Oil prices earlier topped $110 a barrel after Trump over the weekend warned that the U.S. would attack Iran’s power plants and bridges if the strategic Strait of Hormuz — through which about 20% of the world’s crude oil supply passes — was not reopened.
Strait of Hormuz to Reopen
However, ahead of Trump’s April 7th, 8 p.m. Eastern Time deadline for Iran to reopen the waterway, or “a whole civilization will die tonight,” Trump announced on Truth Social on Tuesday at 6:32 p.m. ET that the country has agreed to a two-week ceasefire “subject to the Islamic Republic of Iran agreeing to the COMPLETE, IMMEDIATE, and SAFE OPENING of the Strait of Hormuz.”
The American president noted that while almost all various points of contention between the two countries have been agreed upon, the two-week “double-sided ceasefire” window will enable them to finalize and consummate these agreements.
Lower oil prices mean a refining margin boost for refiners such as Valero Energy (VLO), Phillips 66 (PSX), and Marathon Petroleum (MPC), but earnings pressure for the oil majors and oilfield services giants such as Halliburton (HAL) and Schlumberger (SLB).
Which Is the Best Oil Stock to Buy?
Despite what falling oil prices mean for oilfield services giant Schlumberger (SLB), TipRanks Best Oil Stocks tool shows that SLB continues to offer the biggest upside of about 11%. This is based on an average price target of $55.86 and a Strong Buy consensus rating.
