U.S. and European energy stocks slid on Wednesday, as a ceasefire to the Middle East conflict punctured the hefty war premium built into oil prices due to fears of supply disruption through the Strait of Hormuz.Oil fell below US$100 per barrel after U.S. President Donald Trump late on Tuesday agreed to a two-week suspension of strikes on Iran, subject to the immediate and safe reopening of the strait.?The initial market reaction has been significant, but sentiment will remain driven by headline risk,? said Achilleas Georgolopoulos, senior market analyst at brokerage XM.?Any sign that the ceasefire is hanging by a thread can quickly reverse today?s improved risk appetite, with oil prices reacting first.?Brent futures hit their lowest in nearly a month at $90.40, retreating from record monthly gains in March driven by supply disruptions related to the conflict.Brent and U.S. West Texas Intermediate CLc1 have risen 50.8 per cent and 68.5 per cent, respectively, since late February to April 7, when Middle East tensions disrupted the Strait of Hormuz, a key oil shipping corridor.Matthew Ryan, head of market strategy at global financial services firm Ebury, said volatility is likely to remain elevated as markets assess ceasefire negotiations and shipping activity.Oil slide punctures conflict-driven rallyEnergy equities, which had surged earlier in the year on higher oil prices, led broader market declines.Shares of Exxon Mobil and Chevron fell more than five per cent, while producers including Occidental Petroleum, Devon Energy, Diamondback Energy and ConocoPhillips slid between 5.1 per cent and 7.5 per cent. Oilfield services companies and refiners also fell broadly.Capital One Securities analysts said it?s going to be a painful day for E&P (exploration and production) and most energy-related names.Liquefied natural gas exporters, which had benefited from elevated spot prices during the conflict, were among the worst hit, with Venture Global and Cheniere Energy down 12 per cent and 5.9 per cent, respectively.The pullback follows a strong first quarter for the sector, when soaring oil prices pushed the S&P 500 Energy Index up more than 37 per cent, making it the top-performing sector in the S&P 500 index, which fell about 4.6 per cent over the same period.Ashley Kelty, an analyst at Panmure Liberum, said the pause may allow markets more time to digest the fallout of the conflict and price in the damage to facilities and time needed to ramp-up production.LNG exporters, European majors hardest hitIn Europe, shares of TotalEnergies, Shell, BP, Eni, and Repsol fell between 4.6 per cent and 7.7 per cent.Norway?s Equinor slumped 8.7 per cent, while Var Energi and Aker BP lost 11.8 per cent and 9.9 per cent, respectively.Europe?s oil & gas sector was the worst performer, shedding 2.6 per cent and on track for its biggest daily fall since April 2025. The index is still up nearly 30 per cent so far in 2026.Elsewhere, falling oil prices lifted airline shares, with United Airlines, Delta Air Lines and American Airlines each gaining over seven per cent, offering relief after weeks of pressure from higher fuel costs.(Reporting by Pooja Menon and Joel Jose in Bengaluru and Danilo Masoni in London; Editing by Alun John, Subhranshu Sahu and Arun Koyyur)
