Shell, BP, TotalEnergies fall as oil slumps on Iran ceasefire

European oil and gas shares fell sharply on Wednesday after the United States and Iran agreed to a two-week ceasefire, sending crude prices lower and prompting investors to unwind positions in a sector that had surged on fears of prolonged supply disruption.

The region’s oil and gas index dropped 4.3%, putting it on course for its biggest one-day fall since April 2025.

Even so, the gauge remains up almost 30% so far this year, underlining how strongly energy stocks had rallied as tensions in the Middle East escalated and traders priced in the risk of tighter oil and gas supplies.

Brent crude fell 13% to $95 a barrel, while US crude slid 15% to $95.81 after President Donald Trump announced a temporary truce with Iran.

The ceasefire was said to be conditional on the immediate and safe reopening of the Strait of Hormuz, a key artery for global oil and gas shipments.

Energy stocks lead declines

The sharp drop in crude fed directly through to energy equities, with some of the region’s biggest producers among the heaviest fallers.

Equinor sank 13%, making it the worst performer on Oslo’s benchmark index, while Var Energi dropped 12% and Aker BP fell 15%.

Elsewhere, the sell-off spread across the sector.

BP and Shell were down about 6 per cent to 7%, while Italy’s Eni and France’s TotalEnergies lost 9% and 8% respectively.

Spain’s Repsol also fell 8%, leaving the European oil and gas index as the weakest-performing sector in the region.

Why crude prices slumped

The decline marked a sharp reversal of the trade that had dominated markets for weeks.

Oil prices and energy shares had climbed on concerns that conflict in the region, combined with disruption to Qatar gas supplies and the effective closure of the Strait of Hormuz, could choke off critical flows and tighten global energy markets.

The ceasefire changed that calculation, at least for now.

By easing fears of an immediate supply shock, it removed some of the geopolitical premium that had built up in crude prices and, by extension, in the share prices of oil and gas producers.

A reopening of Hormuz would further reduce pressure on physical markets and could encourage a deeper pullback in prices.

“Crude prices are highly sensitive to geopolitical developments and a truce could be seen as a negative for prices in the short term,” said Howie Lee, economist at Singapore’s OCBC bank.

What investors are watching

The next move for both oil and energy stocks will depend on whether the truce holds and whether shipping through Hormuz normalises.

Investors will be looking for signs that tankers can move safely through the waterway and that regional supply chains begin to stabilise after weeks of disruption.

For equity markets, the immediate read-through is straightforward: lower crude prices are a headwind for producer earnings and a reason to lock in gains after a strong run.

Still, with the sector up almost 30% this year, Wednesday’s sell-off may be seen less as a collapse in confidence than as a repricing of risk as the threat of a prolonged supply crisis begins to ease.