WTI crude futures plunged 7.0% to settle at $95.08 per barrel on Wednesday — the largest single-day decline since March 3, when the conflict began — after Axios reported that US and Iranian negotiators were finalizing a 14-point peace memorandum. Brent crude dropped 7.8% to $101.27, falling below $102 for the first time since late March. The Energy Select Sector SPDR (XLE) fell 4.2%, its worst session since the March drawdown.
The proposed deal would include a 30-day timeline to reopen the Strait of Hormuz under joint US-Omani naval supervision. Since the conflict began, approximately 166 tankers carrying an estimated 170 million barrels of crude and condensate have been stranded or rerouted, effectively removing 17.4 million barrels per day of transit capacity from global supply chains.
Energy Stocks Hammered
Exxon Mobil (XOM) fell 3.8% to $107.20, Chevron (CVX) dropped 4.1% to $152.80, and ConocoPhillips (COP) lost 5.2% to $108.40. Smaller E&P names were hit harder: Diamondback Energy (FANG) fell 6.8%, Devon Energy (DVN) dropped 7.1%, and Pioneer Natural Resources (PXD) declined 5.9%. The sell-off erased approximately $84 billion in market capitalization from the S&P 500 energy sector in a single session.
Tanker and Shipping Impact
Tanker stocks reversed sharply from their conflict-era highs. Frontline (FRO) plunged 9.2%, International Seaways (INSW) fell 8.4%, and DHT Holdings (DHT) dropped 7.6% as traders unwound the war-premium trade. If the Strait reopens, the glut of stranded tankers would flood the market simultaneously, potentially pushing spot rates back to pre-conflict levels of Worldscale 60-70 from the current 140+.