Market Update: Energy Shares Decline

Date: Monday

Energy stocks fell sharply following a decline in oil prices due to Israel's strike on Iran, which avoided critical oil and nuclear infrastructure. This eased geopolitical tensions in the Middle East.

By 08:08 ET (12:08 GMT), the Brent crude contract decreased by 5.8% to $71.63 per barrel, and U.S. crude futures (WTI) dropped by 6.1% to $67.38 per barrel.

In London, shares of oil giants Shell (LON:SHEL) and BP (NYSE:BP) fell in early afternoon trading. In the U.S., ExxonMobil (NYSE:XOM) declined by 2.5% in premarket, while Chevron (NYSE:CVX) was down 2.4%.

Conversely, airline stocks surged before Wall Street opened, benefiting from lower oil prices which could enhance profits for carriers like Delta Air Lines (NYSE:DAL), American Airlines, and United Airlines.

Traders had concerns that strikes on Iranian oil and nuclear facilities might escalate conflict and disrupt oil supplies. Iran, while downplaying the strike's impact, still made threats of retaliation. This event prompted some investors to remove the risk premium from crude prices, shifting attention back to industrial demand, which is anticipated to weaken in upcoming months.

Beyond Middle Eastern tensions, traders are monitoring important upcoming economic indicators that may hint at global oil demand trends. The U.S. is set to release GDP data, nonfarm payrolls, and the Personal Consumption Expenditures (PCE) index—the Federal Reserve's favored inflation measure—later this week. Additionally, China’s latest Purchasing Managers' Index (PMI), reflecting business activity after recent stimulus measures, will be released soon.