Key Takeaways
- Major oil producers including Exxon, Chevron, and ConocoPhillips experienced significant declines in premarket sessions following ceasefire news
- Brent crude plummeted over 10% to $96.73 while WTI collapsed nearly 14% to $95.45
- President Trump declared a conditional two-week ceasefire requiring Iran to fully reopen the Strait of Hormuz
- Energy stocks had rallied between 34% and 42% year-to-date on Middle Eastern geopolitical tensions
- Declining crude prices create headwinds for exploration companies while benefiting refining operations like Valero and Marathon
President Donald Trump’s surprise announcement of a two-week ceasefire involving the United States, Israel, and Iran late Tuesday evening triggered a dramatic selloff in energy markets and erased substantial gains across the oil sector.
The ceasefire declaration arrived moments before Trump’s April 7th ultimatum deadline, coming at 8 p.m. Eastern Time. The president had previously threatened Iran with severe repercussions should it fail to reopen the strategically vital Strait of Hormuz.
Trump revealed via Truth Social at 6:32 p.m. ET that Iran had accepted ceasefire terms, which hinge upon the “complete, immediate, and safe opening” of the critical shipping channel.
The Strait of Hormuz serves as a chokepoint for approximately 20% of global crude oil shipments. Threats to this waterway had been instrumental in driving oil prices higher throughout recent weeks.
Oil prices had climbed above $110 per barrel previously, following Trump’s weekend warnings that the United States would strike Iran’s infrastructure including power facilities and bridges unless the strait was cleared.
In the wake of the ceasefire announcement, Brent crude futures plummeted more than 10% to $96.73 per barrel. West Texas Intermediate crashed nearly 14% to $95.45, breaking decisively below the $100 threshold.
Exxon Mobil plunged 6.3% during premarket hours. Chevron declined 4.8%, while Occidental Petroleum slid 8.5%. Exploration company APA tumbled 10%, as Diamondback Energy and Devon Energy retreated 7.7% and 6.4% respectively.
ConocoPhillips joined the widespread selloff. The three oil supermajors — Exxon, Chevron, and ConocoPhillips — had posted impressive gains of approximately 37%, 34%, and 42% respectively since the beginning of January.
Year-to-Date Rally Faces Reversal Risk
Exxon recorded its strongest quarterly performance ever in Q1 2026, soaring 41%. Chevron advanced 36% during the identical timeframe. Both equities had extended gains as regional tensions escalated.
Exxon separately disclosed in a Wednesday regulatory filing that it anticipates oil production declining roughly 6% in Q1 versus Q4 2025, attributable to operational disruptions in Qatar and the United Arab Emirates.
The energy giant projected that favorable pricing conditions would contribute $2.1 to $2.9 billion to upstream segment earnings compared to the previous quarter. Conversely, production volume challenges are forecast to reduce combined upstream and downstream results by $400 million to $800 million.
Exxon is scheduled to publish complete Q1 financial results on May 1.
Shell disclosed that its liquefied natural gas output would similarly decline in Q1 due to conflict-related impacts on Qatari operations. Shell stock retreated 5.4% in London trading and 4.2% during U.S. premarket activity.
Refining Sector Positioned for Upside
The energy sector selloff isn’t universally negative. Declining crude oil costs enhance profit margins for refining operations.
Valero Energy, Phillips 66, and Marathon Petroleum represent key refiners poised to capitalize on reduced input costs.
Oilfield services providers including Halliburton and Schlumberger, conversely, confront earnings headwinds similar to those affecting the major producers.
Trump indicated that the majority of disputed issues between Washington and Tehran have reached preliminary agreement. The two-week ceasefire window is designed to complete negotiations on remaining details.
Should the ceasefire prove durable and normal operations resume at the Strait of Hormuz, market analysts anticipate additional downward pressure on oil prices throughout coming weeks.
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