U.S. Energy Shares Decline as Crude Prices Plummet
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Source: Newsfilter
- Crude Price Collapse: Brent crude futures fell 5.2% to $82.83 per barrel, while U.S. West Texas Intermediate dropped 5.6% to $80.09 per barrel, directly impacting energy stocks and leading to a decline in investor confidence.
- Energy Stocks Decline: Shares of Exxon Mobil (XOM) and Chevron (CVX) fell by 3% and 2.6%, respectively, with other companies like Diamondback Energy (FANG), Devon Energy (DVN), and ConocoPhillips (COP) experiencing declines between 2.8% and 3.7%, reflecting market concerns over future oil prices.
- Geopolitical Impact: The preliminary agreement between the U.S. and Iran may end the conflict and reopen the Strait of Hormuz, although analysts caution that it could take months for oil flows to return to pre-war levels, affecting the global oil supply-demand balance.
- Cautious Market Reaction: While there is growing optimism about a return to 'normalcy', analysts highlight that issues such as tankers being in the wrong locations, insufficient production facility recovery, and insurance costs will continue to hinder a rapid recovery in the oil market.
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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: 140.740
Low
114.00
Averages
132.17
High
158.00
Current: 140.740
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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- Environmental Impact Assessment: Although the proposed project will not significantly impact the environment and thus does not require an environmental impact assessment, a cumulative impact assessment must be filed, reflecting the company's cautious approach to environmental compliance and helping to maintain its public image.
- Economic Growth Driver: Exxon’s operations in the Stabroek block are driving rapid economic growth in Guyana, with current crude oil production exceeding 900,000 barrels per day and on track to expand to 1.7 million barrels per day by 2030, further solidifying its position in the global energy market.
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- Importance of Inventories: The geopolitical conflict in the Middle East has led to the use of global oil inventories as a buffer against supply disruptions, but rebuilding these inventories will take time, resulting in demand being higher than normal in the short term, which could affect price stability.
- Industry Warnings: Energy giants ExxonMobil and Chevron have warned that the current U.S. strategic oil reserves are at their lowest level since 1983, suggesting that the timeline for market normalization may be underestimated, with potential for rising oil prices ahead.
- Sustainability Risks of Agreement: Although the reopening agreement may lead to a short-term increase in oil flow, the high-risk nature of the Strait of Hormuz raises questions about the long-term viability of the deal, prompting investors to remain cautious and avoid premature optimism regarding market signals.
See More
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- Price Volatility Warning: Oil prices have recently fallen due to easing geopolitical tensions in the Middle East, yet the CEOs of Chevron and ExxonMobil caution that prices do not reflect market fundamentals, indicating that recovery may take longer than anticipated.
- Need for Inventory Rebuilding: With the U.S. strategic oil reserves at their lowest since 1983, Chevron and ExxonMobil emphasize that rebuilding inventories is crucial for restoring supply-demand balance, likely extending the energy market recovery beyond current investor expectations.
- Increased Transportation Risks: While Iranian oil tankers are now moving through the Strait of Hormuz, this high-risk transportation will require time to assess the stability of the new agreement, potentially leading to exaggerated short-term market reactions to oil price fluctuations.
- Caution from Industry Giants: As two of the world's largest energy companies, Chevron and ExxonMobil's insights into market turbulence are invaluable, and investors should heed their warnings to make informed decisions in an uncertain market environment.
See More
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- Energy ETF Performance: The Vanguard Energy ETF has delivered a 25% return year-to-date but has lost about 11% of its value since reaching an all-time high on March 27, indicating uncertainty in the future of energy stocks amid geopolitical tensions.
- Market Reaction: The S&P 500 index is up 10.4% year-to-date and has gained about 19% since hitting a 2026 low on March 30, but this may be bad news for energy stocks as the Vanguard Energy ETF and the S&P 500 have been moving in opposite directions since late March.
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See More
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- Chip Stocks Lead Gains: Intel shares surged 7% after Trump announced a partnership with Apple to design and produce semiconductors domestically, propelling the entire semiconductor sector higher, with the iShares Semiconductor ETF rising over 5%, reflecting strong investor confidence in tech stocks.
- Energy Stocks Under Pressure: Crude oil prices fell more than 3%, putting pressure on energy producers, with major companies like ExxonMobil and Chevron experiencing declines, highlighting market concerns regarding the energy sector's outlook amid falling oil prices.
- Supportive Economic Data: Initial jobless claims in the US fell to 226,000, close to the expected 225,000, indicating labor market resilience, while the Philadelphia Fed business outlook index rose to 10.3, exceeding expectations, further bolstering market optimism.
See More
Exxon Mobil Submits New Exploration Plan for Guyana's Stabroek Block
- New Exploration Plan: Exxon Mobil (XOM) has submitted a new exploration and appraisal program to the Guyana Environmental Protection Agency, which could involve drilling up to 35 new wells, with operations set to commence in 2028 and run through 2033, indicating the company's long-term commitment to resource development in the region.
- Environmental Impact Assessment: Although the proposed project will not significantly impact the environment and thus does not require an environmental impact assessment, a cumulative impact assessment must be filed, reflecting the company's cautious approach to environmental compliance and helping to maintain its public image.
- Economic Growth Driver: Exxon’s operations in the Stabroek block are driving rapid economic growth in Guyana, with current crude oil production exceeding 900,000 barrels per day and on track to expand to 1.7 million barrels per day by 2030, further solidifying its position in the global energy market.
- Ownership Structure: Exxon Mobil holds a 45% stake in the block, operating alongside Chevron (CVX) with 30% and China's CNOOC with 25%, highlighting its significant role in international energy collaboration.
See More
US Stocks Rise on US-Iran Peace Deal Optimism
- Market Rally: The S&P 500 rose 1.08%, the Dow Jones increased by 0.14%, and the Nasdaq 100 surged 2.48% as optimism over the US-Iran peace deal eased inflation risks, reflecting a positive market sentiment.
- Chip Sector Surge: Intel's stock jumped over 10% after President Trump announced a partnership with Apple to design and produce semiconductors domestically, leading the iShares Semiconductor ETF to rise more than 7%, indicating strong momentum in the tech sector.
- Energy Stocks Weaken: WTI crude oil prices fell to a 3.5-month low, causing significant declines in energy stocks, with SLB, ConocoPhillips, and Halliburton dropping over 3%, highlighting concerns over energy price volatility.
- Supportive Economic Data: Initial jobless claims fell to 226,000, close to the expected 225,000, indicating labor market strength, while the Philadelphia Fed business outlook index rose to 10.3, surpassing expectations, further boosting investor confidence.
See More
US-Iran Agreement to Reopen Strait of Hormuz
- Oil Price Fluctuations: While Iranian tankers are moving through the Strait of Hormuz, oil prices are falling due to market misconceptions about supply recovery, indicating that investor optimism regarding a quick return to normalcy may lead to increased price volatility in the future.
- Importance of Inventories: The geopolitical conflict in the Middle East has led to the use of global oil inventories as a buffer against supply disruptions, but rebuilding these inventories will take time, resulting in demand being higher than normal in the short term, which could affect price stability.
- Industry Warnings: Energy giants ExxonMobil and Chevron have warned that the current U.S. strategic oil reserves are at their lowest level since 1983, suggesting that the timeline for market normalization may be underestimated, with potential for rising oil prices ahead.
- Sustainability Risks of Agreement: Although the reopening agreement may lead to a short-term increase in oil flow, the high-risk nature of the Strait of Hormuz raises questions about the long-term viability of the deal, prompting investors to remain cautious and avoid premature optimism regarding market signals.
See More
Oil Market Recovery Faces Significant Challenges
- Price Volatility Warning: Oil prices have recently fallen due to easing geopolitical tensions in the Middle East, yet the CEOs of Chevron and ExxonMobil caution that prices do not reflect market fundamentals, indicating that recovery may take longer than anticipated.
- Need for Inventory Rebuilding: With the U.S. strategic oil reserves at their lowest since 1983, Chevron and ExxonMobil emphasize that rebuilding inventories is crucial for restoring supply-demand balance, likely extending the energy market recovery beyond current investor expectations.
- Increased Transportation Risks: While Iranian oil tankers are now moving through the Strait of Hormuz, this high-risk transportation will require time to assess the stability of the new agreement, potentially leading to exaggerated short-term market reactions to oil price fluctuations.
- Caution from Industry Giants: As two of the world's largest energy companies, Chevron and ExxonMobil's insights into market turbulence are invaluable, and investors should heed their warnings to make informed decisions in an uncertain market environment.
See More
US and Iran Reach Deal to End War and Reopen Strait of Hormuz
- Oil Price Volatility: Since the U.S. and Israel attacked Iran on February 28, oil prices and global stocks have experienced significant volatility, resulting in widespread damage to Middle Eastern oil infrastructure and a shutdown of oil shipments through the vital Strait of Hormuz, impacting global energy supply.
- Energy ETF Performance: The Vanguard Energy ETF has delivered a 25% return year-to-date but has lost about 11% of its value since reaching an all-time high on March 27, indicating uncertainty in the future of energy stocks amid geopolitical tensions.
- Market Reaction: The S&P 500 index is up 10.4% year-to-date and has gained about 19% since hitting a 2026 low on March 30, but this may be bad news for energy stocks as the Vanguard Energy ETF and the S&P 500 have been moving in opposite directions since late March.
- Investment Advice: Although the Vanguard Energy ETF has achieved an average annual return of 21.1% over the past five years, the complex situation in the Middle East suggests that oil prices could plummet in the future, leading to a recommendation for long-term investors to be cautious and avoid heavy investments in oil stocks.
See More
US Stocks Surge as Geopolitical Risks Ease
- Market Rebound: The signing of a preliminary deal by President Trump to end the US-Iran war has driven crude oil prices to a 3.5-month low, resulting in a broad market rally with the S&P 500 up 0.99% and the Nasdaq 100 up 2.16%, indicating a resurgence in risk appetite among investors.
- Chip Stocks Lead Gains: Intel shares surged 7% after Trump announced a partnership with Apple to design and produce semiconductors domestically, propelling the entire semiconductor sector higher, with the iShares Semiconductor ETF rising over 5%, reflecting strong investor confidence in tech stocks.
- Energy Stocks Under Pressure: Crude oil prices fell more than 3%, putting pressure on energy producers, with major companies like ExxonMobil and Chevron experiencing declines, highlighting market concerns regarding the energy sector's outlook amid falling oil prices.
- Supportive Economic Data: Initial jobless claims in the US fell to 226,000, close to the expected 225,000, indicating labor market resilience, while the Philadelphia Fed business outlook index rose to 10.3, exceeding expectations, further bolstering market optimism.
See More
