Key Highlights
- Shares of Exxon and Chevron declined more than 3.5% amid a sharp crude oil selloff driven by diplomatic optimism
- Brent crude plummeted over 10% to approximately $97.97 per barrel, breaking below the $100 threshold
- West Texas Intermediate crude tumbled more than 11% to roughly $90.35 per barrel
- President Trump temporarily halted the “Project Freedom” military initiative in the Strait of Hormuz, referencing significant diplomatic advancement
- Major European energy companies experienced substantial losses, with BP sliding more than 5% and Shell falling 4.5%
Major oil companies experienced significant declines 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 productive diplomatic engagement with Iran.
In a late Tuesday post on Truth Social, Trump revealed he was halting “Project Freedom,” a military initiative designed to ensure the strait remained open. He indicated the suspension would be brief while diplomatic discussions with Tehran advanced.
The revelation triggered a dramatic decline in oil prices. Brent crude tumbled more than 10% to approximately $97.97 per barrel, slipping beneath the psychologically important $100 level. West Texas Intermediate plunged over 11% to $90.35 per barrel.
Exxon Mobil stock declined roughly 3.6% during early market hours. Chevron experienced a decrease of approximately 3.3%. The two companies ranked among the most significantly impacted in America’s energy sector.
Additional U.S. petroleum companies experienced considerable setbacks. Occidental Petroleum topped premarket declines with a 7.6% drop. Marathon Petroleum decreased 6.3%, ConocoPhillips fell 5.4%, Devon Energy retreated 5.7%, and Diamondback Energy declined 4.5%.
Occidental simultaneously released quarterly results Wednesday. The firm reported a substantial increase in adjusted earnings, though revenue figures fell short of Wall Street projections for the initial quarter.
APA retreated 4.6% during the session. The benchmark S&P 500 index, conversely, advanced 0.8%, as diminishing regional tensions boosted other market segments.
European Energy Giants Experience Similar Declines
The market retreat extended beyond American borders. Major European energy corporations posted comparable losses.
In London trading, BP dropped more than 5% to 542.2p. Shell retreated 4.5% to 3,165.5p. France’s TotalEnergies declined 5.4% to €75.07 on the Paris exchange.
According to Axios, the Trump administration expressed confidence it was approaching agreement on a single-page memorandum of understanding with Iran that could resolve the broader Middle Eastern conflict. The report cited two administration officials and two additional informed sources.
Factors Behind the Crude Oil Collapse
The fundamental catalyst for the price collapse was the possibility of reduced tensions throughout the Gulf area. A diplomatic agreement with Iran would significantly diminish the threat of supply interruptions through the Strait of Hormuz, a critical passage for international petroleum transport.
Trump emphasized in his statement that the existing blockade would “remain in full force and effect” throughout the suspension period.
During April, Iran temporarily reopened the Strait of Hormuz before reimposing restrictions after the United States declined to remove its blockade of Iranian maritime facilities.
As of Wednesday morning, diplomatic exchanges between American and Iranian delegations continued, with no conclusive agreement formally announced.
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