USO, CVX, XOM, OXY Drop Premarket As Trump’s Iran Talks Trigger Crude Oil Selloff

Reports that U.S.-Iran negotiations would begin Monday eased fears of prolonged supply disruptions, sending crude prices sharply lower.

• At the time of writing, Brent crude futures expiring in October were down about 4.6% to $83.88 a barrel.
• Talks will focus on reopening the Strait of Hormuz and negotiations on Iran’s nuclear program.
• Barclays raised its price target on Chevron to $216 from $213 while maintaining an ‘Equal Weight’ rating following the company’s second-quarter results.

Crude oil prices tumbled on Monday after U.S. President Donald Trump announced that negotiations with Iran would begin later in the day, saying there’s a deal to reopen the Strait of Hormuz and that talks on the denuclearization of Iran would follow.

The remarks eased fears of prolonged supply disruptions in the Middle East, sending the United States Oil Fund (USO) down more than 6% in premarket trading.

At the time of writing, Brent crude futures expiring in October were down about 4.6% to $83.88 a barrel, while West Texas Intermediate (WTI) futures for the same expiry dropped roughly 4.5% to $77.8 a barrel.

Talks With Iran Scheduled For Monday

Trump said that U.S. officials would begin talks with Iran on Monday afternoon, adding that an agreement had already been reached on the Strait of Hormuz and that broader negotiations on Iran’s nuclear program would follow, according to a CNN report. The President had earlier called off a planned military strike in favor of pursuing a diplomatic agreement to restore shipping through the strategic waterway.

The Strait of Hormuz is one of the world’s most important oil chokepoints, carrying about one-fifth of global seaborne crude exports.

Energy Stocks See Red

The sharp drop in crude prices weighed broadly on U.S. energy stocks in premarket trading. Chevron (CVX) fell about 1.2%, while Exxon Mobil (XOM) slipped 1.6%.

Among exploration and production companies, Occidental Petroleum (OXY) lost around 1.5%, Devon Energy (DVN) declined nearly 2.6%, and APA Corp. (APA) dropped about 2.8%. Shares of refiners Phillips 66 (PSX) and Marathon Petroleum (MPC) eased around 1% each.

Wall Street Raises Target On Chevron After Q2 Beat

Separately, Barclays raised its price target on Chevron to $216 from $213 while maintaining an ‘Equal Weight’ rating following the company’s second-quarter results. The brokerage highlighted record Permian production, stronger refining margins and lower capital spending as key positives supporting its revised valuation.

On Friday, the energy behemoth reported its highest quarterly revenue in four years while earnings rose to $6.11 per share, comfortably beating Street estimates on both occasions, according to Fiscal.ai data.

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