What Happened?
A number of stocks jumped in the afternoon session after oil prices surged following attacks on commercial ships near the Strait of Hormuz.
Multiple tankers were reportedly struck by projectiles in the critical shipping lane, a key passageway for global oil transport. The incident immediately pushed crude oil prices higher, with the August contract rising to over $72 a barrel. This development adds a layer of uncertainty for investors, as sustained higher oil prices can fuel inflation.
Simultaneously, a drone attack on Russia's largest refinery signaled a significant expansion in the Ukraine conflict, further pressuring prices upward. Higher oil prices typically translate to increased revenues and profitability for oil and gas companies, boosting investor sentiment across the sector.
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 Tidewater (NYSE: TDW) jumped 3.3%. Is now the time to buy Tidewater? Access our full analysis report here, it’s free.
- Mixed or Offshore Upstream E&P company Magnolia Oil & Gas (NYSE: MGY) jumped 3.2%. Is now the time to buy Magnolia Oil & Gas? Access our full analysis report here, it’s free.
- U.S. Shale E&P company Cactus (NYSE: WHD) jumped 3.1%. Is now the time to buy Cactus? Access our full analysis report here, it’s free.
Zooming In On Tidewater (TDW)
Tidewater’s shares are quite volatile and have had 19 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 19 days ago when the stock dropped 6% on the news that the U.S. and Iran signed an interim agreement that would waive sanctions on Tehran's oil and reopen the Strait of Hormuz.
WTI futures fell as much as 3.5% to an intraday low of $73.60, the lowest since March 2, the first trading day after the initial US-Israeli strikes on Iran, while Brent crude dropped 2% to $77.96. The catalyst was a 14-point memorandum of understanding signed by the US and Iran, which begins a 60-day negotiation period. This stripped away the geopolitical risk premium that had been the energy sector's most powerful tailwind for months.
Under its terms, Iran will allow toll-free passage through the Strait of Hormuz immediately, with full traffic capacity restored within 30 days. Roughly 20% of the world's seaborne oil and LNG transits the strait. Saudi tankers and LNG carriers were already departing the Gulf region as shipping activity began to normalize. Oil reached as high as $120 per barrel at the peak of the conflict and fell nearly 29% in a month. That collapse reflects markets pricing in the return of Iranian barrels to global supply, barrels that had been sanctioned out of the market, alongside the reopening of the world's most critical energy shipping lane.
Tidewater is up 36.2% since the beginning of the year, but at $71.14 per share, it is still trading 21.9% below its 52-week high of $91.12 from April 2026. Investors who bought $1,000 worth of Tidewater’s shares 5 years ago would now be looking at an investment worth $6,029.
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