On March 31, stock markets soared after the U.S. announced a ceasefire. The S&P 500 (SPY) ETF bottomed at around $630. It closed at $679.46 on April 10.
Over the weekend, the U.S. predictably said that peace talks broke down. The U.S. President posted that the U.S. would block the Strait of Hormuz. Unfortunately, that announcement comes after Iran already blocked the Strait. The last several weeks of closure are creating an oil crisis that will rival that of the last seen in the 1970s.
Saudi Arabia said that it repaired its damaged energy facilities. Similarly, Iran said that it would not take long to repair its refining capability. This suggests that the oil crisis is causing Asian countries to limit usage temporarily. The negative impact on the global economy might prove short-lived.
Investors might see the rally in shares of Devon Energy (DVN), Chevron (CVX), BP (BP), and Exxon Mobil (XOM) lose momentum. Watch for WTI crude prices to hold the $91 - $100 level first. If prices fall below that, oil stocks would give up some of their gains for 2026.
Strait of Hormuz Not Open
The ceasefire news did not result in the strait re-opening. Abu Dhabi Oil CEO Sultan Ahmed Al Jaber said last week that the strait was not truly open.
For now, Iran may collect a fee for ships that want to pass. The U.S. and Israel will have a tough time changing that.
