What Happened?
A number of stocks fell in the afternoon session after energy stocks pulled back despite oil prices remaining structurally elevated, as WTI crude fell 1.76% to $91.40 a barrel (still more than 40% above year-ago levels).
The president said US-Iran talks were "progressing well" and reiterated he would be "honored" to meet Iran's supreme leader to make a deal, raising the possibility that Strait of Hormuz disruptions could ease faster than the market had priced.
Energy stocks trade a risk premium derived from supply scarcity. If a ceasefire materializes, that premium unwinds sharply. The stronger-than-expected jobs report added a second layer: higher interest rates increase the cost of capital for exploration and production companies carrying significant debt, compressing returns on future investment. Investors reduced exposure ahead of any deal announcement rather than waiting to react.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Mixed or Offshore Upstream E&P company Peabody Energy (NYSE: BTU) fell 7.6%. Is now the time to buy Peabody Energy? Access our full analysis report here, it’s free.
- U.S. Shale E&P company HighPeak Energy (NASDAQ: HPK) fell 7.6%. Is now the time to buy HighPeak Energy? Access our full analysis report here, it’s free.
Zooming In On HighPeak Energy (HPK)
HighPeak Energy’s shares are extremely volatile and have had 72 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 4 days ago when the stock gained 4.4% on the news that crude oil prices climbed amid escalating geopolitical tensions between the U.S. and Iran.
The increase followed a U.S. bombing of Iranian military sites, which was in retaliation for Tehran shooting down an American drone. In response, Iran announced it would stop negotiations with the U.S. and move to fully close the Strait of Hormuz, a critical waterway for global oil transit.
The news sent oil prices leaping, with U.S. crude rising to over $90 a barrel and the international benchmark, Brent crude, surpassing $93. Some reports noted prices topping $100 per barrel. As an oil producer focused on the Permian Basin, HighPeak Energy benefits directly from higher energy prices, which boosts its revenue and profitability prospects.
HighPeak Energy is up 72% since the beginning of the year, but at $7.69 per share, it is still trading 35.4% below its 52-week high of $11.90 from June 2025. Despite the year-to-date gain, investors who bought $1,000 worth of HighPeak Energy’s shares 5 years ago would now be looking at only $782.10.
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