Iran peace deal floods the market with oil — short energy stocks and oil funds
A peace deal between the US and Iran will reopen a major shipping route for oil, meaning a lot more supply is about to hit the market. Because of this, oil prices have dropped to their lowest levels in months.
Idea
The agreement to reopen the Strait of Hormuz takes a major geopolitical risk premium off the table, causing Wall Street banks to slash their price forecasts. With a wave of new supply expected to hit the market and prices already breaking below the $80 mark, the trend for oil is clearly pointing down. Companies that drill and refine oil, like ExxonMobil and Chevron, usually see their profit margins shrink when crude prices fall. Betting against oil and major oil companies as this new supply floods the market is a straightforward way to play the news.