Iran ceasefire could send oil prices tumbling further — short oil and oil majors
The US and Iran have tentatively agreed to extend their ceasefire by 60 days, raising hopes that oil shipments through the critical Strait of Hormuz can resume. Oil prices are on track for their worst month since 2020.
Idea
A 60-day ceasefire extension between the US and Iran dramatically reduces the risk of a prolonged Strait of Hormuz blockade, which had been keeping a big fear premium baked into oil prices. With Brent crude already posting its steepest monthly decline since 2020, the momentum is clearly to the downside. If shipments through Hormuz actually resume, the extra supply hitting the market will push prices even lower. Oil majors like ExxonMobil and Chevron, which rallied hard on war fears, could also give back gains as the risk premium evaporates.