Oil crashing 20% as Iran peace deal nears — bet on lower energy prices while the unwind continues
Oil has already fallen 20% from its 2026 highs as the U.S. and Iran edge toward a peace deal that could reopen the Strait of Hormuz. President Trump now says a 'final determination' is coming soon, which could send oil prices even lower.
Idea
The Strait of Hormuz blockade in February sent oil prices spiking, but now a ceasefire deal looks imminent. If Hormuz reopens, the supply bottleneck that propped up prices disappears overnight. Oil has already dropped 20%, but history shows that when geopolitical risk premiums unwind, the move tends to overshoot to the downside as traders who bought oil as a hedge all rush to sell at once. Energy stocks in the XLE index are especially vulnerable because they rode the war premium up and now face shrinking profit margins if crude keeps falling.