Oil Prices Drop, Potential Relief at the Pump
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Apr 08 2026
0mins
Source: CNBC
- Oil Price Decline: Oil prices plummeted on Wednesday following a two-week ceasefire agreement between the U.S. and Iran, with West Texas Intermediate crude futures dropping from nearly $113 to about $95, and Brent crude futures falling from $109 to $95, indicating potential relief for consumers at the gas pump.
- Gas Price Expectations: Analysts predict that gas prices may decrease by 10 to 20 cents per gallon over the next few weeks due to the ceasefire, although this forecast hinges on the ceasefire's durability; if tensions escalate, prices could spike again.
- Market Response: The national average gas price was reported at $4.16 per gallon on Wednesday, up from just under $3 before the Iran conflict began on February 28, and significantly higher than the $5.01 peak in June 2022 due to supply disruptions, reflecting the market's sensitivity to oil price fluctuations.
- Supply Chain Challenges: While the ceasefire may lead to increased oil supply, analysts caution that prices are unlikely to return to pre-conflict levels due to heightened geopolitical risks in the Middle East, compounded by seasonal demand increases during summer, which could further pressure gas prices.
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Analyst Views on XOM
Wall Street analysts forecast XOM stock price to fall
19 Analyst Rating
12 Buy
7 Hold
0 Sell
Moderate Buy
Current: 151.980
Low
114.00
Averages
132.17
High
158.00
Current: 151.980
Low
114.00
Averages
132.17
High
158.00
About XOM
Exxon Mobil Corporation is an energy provider and chemical manufacturer. The Company’s principal business involves exploration for, and production of, crude oil and natural gas; the manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a wide variety of specialty products; and pursuit of lower-emission and other new business opportunities, including carbon capture and storage, hydrogen, lower-emission fuels, Proxxima systems, carbon materials, and lithium. Its Upstream segment explores for and produces crude oil and natural gas. The Energy Products, Chemical Products, and Specialty Products segments manufacture and sell petroleum products and petrochemicals. Energy Products segment includes fuels, aromatics, and catalysts and licensing. Chemical Products segment consists of olefins, polyolefins, and intermediates. Specialty Products segment includes finished lubricants, basestocks and waxes, synthetics, and elastomers and resins.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Escalation of Military Actions: IRGC gunboats reportedly fired on commercial vessels near the Omani coast, issuing radio warnings that effectively shut down unauthorized traffic, further escalating regional tensions and impacting global energy market stability.
- Intensifying Power Struggle: Following Supreme Leader Khamenei's death, Iran's internal power struggles have intensified, with the absence of centralized authority emboldening hard-liners to operate more autonomously under the
See More
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- Global Energy Supply Disrupted: The strait carries about one-fifth of global LNG supplies, and Iran's sudden reversal forced multiple LNG tankers loaded in Qatar to turn back or idle, severely impacting energy supply chains.
- Market Uncertainty Intensifies: U.S. President Trump reaffirmed that the naval blockade on Iranian ports would remain, which Iran viewed as a breach of the truce, further exacerbating market volatility and uncertainty.
- High-Risk Status Persists: Insurance providers remain cautious due to ongoing threats of attacks, mines, and interceptions, maintaining the 'high-risk' status of the strait and leaving global energy markets in a state of profound uncertainty.
See More
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- Future Price Forecast: The EIA projected that even after the resumption of oil flows through Hormuz, prices would likely stay elevated due to the time required to sort out backed-up tanker routes and trade flows, reflecting the complexity of future oil price trajectories.
See More
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- Withdrawal of Sale Offer: Exxon Mobil has withdrawn its offer to sell two initial cargoes of LNG from its Golden Pass export plant in Texas, a move that could negatively impact short-term revenue expectations, although no reason was provided for this decision.
- Low Capacity Utilization: Since starting production last month, Golden Pass has been operating at only one-third of its nameplate capacity, liquefying approximately 287M cf of natural gas on Thursday, indicating significant challenges and uncertainties in the project's startup phase.
- Delays and Cost Overruns: The Golden Pass project has faced multiple delays and cost overruns since construction began in 2019, including the bankruptcy of its original lead contractor, which may undermine investor confidence and affect the project's long-term viability.
- Equity Structure Analysis: With a total investment of $10 billion, QatarEnergy holds a 70% stake in the project while Exxon Mobil owns the remaining 30%, which limits Exxon's risk exposure and potential returns from this venture.
See More
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- Energy Flow Disruption: The ongoing US-Iran conflict, now in its 45th day, has stalled energy flows through the Strait of Hormuz, impacting approximately 15 million barrels per day, which constitutes about 15% of total global liquids demand, posing a significant threat to industrial output and energy inflation in the Asia-Pacific region.
- Market Reaction: Brent crude prices initially surged to $120 per barrel but have recently retreated below $100, indicating that market participants are viewing the current supply gap as a short-term anomaly rather than a structural crisis, reflecting optimism for a diplomatic resolution.
- Logistical Challenges: Currently, no oil tankers are transiting the Strait of Hormuz, with over 750 vessels, including 138 laden oil tankers, stranded in the Arabian Gulf, and restarting these vital shipping lanes will require complex, non-punitive shipping protocols and revised insurance arrangements.
- Monitoring Recommendations: Bernstein warns that the market is underestimating the time-intensive logistical hurdles necessary to restore global supply equilibrium, and investors should closely monitor developments regarding international shipping insurance and transit agreements, as these will be critical indicators for when global energy markets can normalize.
See More
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- PE Compression: Despite the S&P 500 reaching an all-time high, the price-to-earnings (PE) ratio has declined from above 23 in October to around 22 over the past six months, indicating cautious investor sentiment regarding future earnings expectations.
- Profit Drivers: The current decline in PE ratios is heavily reliant on the artificial intelligence infrastructure boom and war-related energy gains, both of which face sustainability challenges that could lead to market volatility.
- Diverging Investor Views: Some analysts argue that valuations for AI-linked companies, particularly data center suppliers, are finally becoming justified, with PEG ratios at their most attractive levels since 2013, while others caution that this growth may be temporary.
- Geopolitical Risks: The energy sector has seen profit forecasts rise due to the conflict in Iran, yet as demonstrated by recent volatility in the Strait of Hormuz, this sector remains highly sensitive to geopolitical developments, potentially impacting future earnings stability.
See More
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- Strait of Hormuz Closure: The IRGC's abrupt reversal of the Strait's reopening, just hours after Foreign Minister Abbas Araghchi's announcement, highlights significant internal rifts between Iran's government and military, posing major risks to energy transport.
- Escalation of Military Actions: IRGC gunboats reportedly fired on commercial vessels near the Omani coast, issuing radio warnings that effectively shut down unauthorized traffic, further escalating regional tensions and impacting global energy market stability.
- Intensifying Power Struggle: Following Supreme Leader Khamenei's death, Iran's internal power struggles have intensified, with the absence of centralized authority emboldening hard-liners to operate more autonomously under the
See More
Strait of Hormuz Energy Transit Restrictions Reimposed
- Hope for Transit Resumption Fades: Following Iranian Foreign Minister Abbas Araghchi's announcement of the Strait being 'completely open', several tankers attempted to transit but were intercepted by Iranian naval forces, indicating a sharp deterioration in the situation.
- Global Energy Supply Disrupted: The strait carries about one-fifth of global LNG supplies, and Iran's sudden reversal forced multiple LNG tankers loaded in Qatar to turn back or idle, severely impacting energy supply chains.
- Market Uncertainty Intensifies: U.S. President Trump reaffirmed that the naval blockade on Iranian ports would remain, which Iran viewed as a breach of the truce, further exacerbating market volatility and uncertainty.
- High-Risk Status Persists: Insurance providers remain cautious due to ongoing threats of attacks, mines, and interceptions, maintaining the 'high-risk' status of the strait and leaving global energy markets in a state of profound uncertainty.
See More
Trump Claims $92 Oil is 'Only High' as Prices Plummet
- Oil Price Fluctuation: Trump expressed surprise at oil being only $92 a barrel, which is 27% above pre-war levels, indicating market uncertainty about future price movements and potential volatility.
- Strait of Hormuz Open: Iran's foreign minister announced the Strait of Hormuz was 'completely open,' leading to a more than 9% drop in oil prices within hours, with WTI crude falling to $83.85 and Brent to $90.38, highlighting market sensitivity to supply restoration.
- Supply-Demand Tightness: Analysts warned that despite the Strait's reopening, oil markets are tightening, estimating around 13 million barrels per day of supply disruption, indicating that even with short-term price drops, long-term supply-demand imbalances remain a risk.
- Future Price Forecast: The EIA projected that even after the resumption of oil flows through Hormuz, prices would likely stay elevated due to the time required to sort out backed-up tanker routes and trade flows, reflecting the complexity of future oil price trajectories.
See More
