Oil prices are wavering as traders anticipate a U.S.-Iran deal signing in Switzerland on Friday, potentially opening a 60-day ceasefire and easing Strait of Hormuz tensions. If the agreement holds, a meaningful supply-risk premium could drain from crude prices, pressuring energy equities while lifting transport and refining margins.
If talks collapse or Iran refuses to sign, the Hormuz risk premium snaps back sharply and energy equities rerate higher, with XLE and major integrateds recovering recent losses quickly given the structural supply-disruption narrative remains intact.
A confirmed signing with explicit Strait-of-Hormuz language would represent the most tangible de-escalation in years, directly removing the supply-disruption premium from crude and pressuring XLE, XOM, and CVX meaningfully lower over the 60-day window.