Oil plunges 20% on peace hopes but ships are still being attacked — contrarian energy play
Oil prices have crashed 20% from their peak because investors are hopeful a US-Iran peace deal will reopen the Strait of Hormuz. But the CEO of Chevron just confirmed that ships are still being attacked there this week.
Idea
The market has already priced in a successful Iran peace deal by knocking 20% off oil prices. Yet the Chevron CEO is telling us that tanker attacks are happening right now — the strait is not safe. If peace talks stall or collapse, oil could snap back violently because so many traders have already sold. Think of it like buying insurance after everyone else decided they don't need it anymore. Energy stocks like Chevron and Exxon tend to move in the same direction as oil, and they're currently cheaper than they've been in weeks. The risk-reward is attractive because the bad news (attacks) is already happening but the market is choosing to ignore it.