Reports of a U.S.-Iran memorandum to pause hostilities triggered a sharp oil market sell-off. President Trump paused the Project Freedom naval mission aimed at escorting ships through the Strait of Hormuz. These developments significantly reduced the geopolitical risk premium previously supporting high energy prices.
West Texas Intermediate (WTI) futures fell over 10% to trade below $92 per barrel. Brent crude dropped below $100 per barrel. This move marks the most significant single-day price drop in weeks. Markets now anticipate eased supply constraints and the potential reopening of the Strait of Hormuz for global shipments.
Energy stocks underperformed the broader market following the decline in crude prices. Shares of Chevron (CVX) and Exxon Mobil (XOM) both fell by more than 3.5%. Lower price forecasts weighed on future earnings expectations for major producers. This downturn directly impacted energy-focused funds including the VDE ETF.