Oil just had its worst month in 6 years on Iran deal hopes — short the energy sector if the breakout continues
Oil prices just suffered their worst monthly decline in six years because President Trump says the U.S. is close to a deal with Iran that could end the conflict and reopen critical shipping routes. If a deal happens, oil could drop even further.
Idea
Oil is already down huge this month, but the situation isn't resolved yet — Trump says a 'final determination' is coming soon. If a deal is struck, the Strait of Hormuz could reopen, which would unleash a massive amount of oil supply that's been bottled up since the February conflict began. That supply hitting the market all at once could drive prices even lower. The trade works through XLE (big energy companies like Exxon and Chevron) because those stocks also fall when oil drops — and they're easier to short than oil futures. The main risk is that the deal falls apart, which could cause a sharp snap-back rally, so the strategy uses a tight stop and only enters when the downward trend is confirmed.