Iran deal could unlock oil supply and crush prices further — short the bounce in oil stocks
Oil prices just had their worst month in six years, and they could keep falling. President Trump says a deal with Iran is close, which could end the conflict that blocked a critical oil shipping route and potentially unlock a lot more oil supply.
Idea
Brent crude just posted its biggest monthly decline in six years and the selling may not be done. President Trump announced a 'final determination' on an Iran deal is imminent — if a ceasefire is reached, the Strait of Hormuz could reopen, freeing up a massive amount of oil supply that's been bottlenecked since the conflict began in February. More supply hitting the market means lower prices. Oil stocks (via XLE) and oil itself (via USO) are still well above pre-conflict levels, so there's room to fall if a deal materializes. Any short-term bounces in oil are selling opportunities until the geopolitical risk premium fully unwinds.