Oil Prices Plummet on Rumors of Strait of Hormuz Deal

Oil prices and energy stocks plummeted Tuesday as news spread of a potential deal to reopen the Strait of Hormuz. Treasury Secretary Scott Bessent told CNBC that a U.S.-Iran agreement could be reached later today or tomorrow, sparking fears that the recent surge in oil prices may soon come to an end.

Several major oil producers were among the S&P 500's biggest decliners, with NRG Energy (NRG) and Diamondback Energy (FANG) seeing their shares drop by as much as 18% and 3%, respectively. Meanwhile, West Texas Intermediate crude futures tumbled more than 5% to just under $76 a barrel.

Energy stocks have been on a tear lately, with the sector rising 12.5% in July according to Bank of America analysts. However, President Donald Trump criticized the industry on Monday, stating that companies had raised prices too much amid disruptions caused by the Iran war.