Key Takeaways
- Crude oil futures pulled back as Brent dropped toward $105 per barrel following reports that the US and Iran are exploring a phased agreement to reopen the Strait of Hormuz.
- HSBC raised price targets for energy majors BP (BP) to 640p and Chevron (CVX) to $250, reflecting a robust outlook for the sector despite short-term price volatility.
- Chinese President Xi Jinping urged both Washington and Tehran to return to negotiations during a high-profile meeting with President Donald Trump at the White House.
- Kyiv faced a fresh wave of Russian drone attacks early Friday, with explosions reported near the city center and damage to a 25-story residential building.
US-Iran Diplomacy Impacts Global Energy Markets
Crude oil prices reversed recent gains on Friday as traders reacted to a potential diplomatic breakthrough in the Middle East. Reports indicate that Iranian Foreign Minister Abbas Araghchi presented a proposal to the US through mediators this week, outlining a seven-day roadmap to reopen the Strait of Hormuz. Under the proposed phased deal, Iran would restore navigation in the vital waterway in exchange for the US lifting its economic blockade and unfreezing Iranian assets.
The news sent Brent crude lower after it had surged more than 7% earlier in the week due to heightened tensions. West Texas Intermediate (WTI) also slipped, trading below $93 per barrel. Market participants are closely watching the UN General Assembly in New York, where indirect talks are reportedly intensifying between US and Iranian envoys.
HSBC Bullish on Energy Majors BP and Chevron
Despite the cooling of oil prices, HSBC analysts issued optimistic updates for two of the world’s largest integrated energy companies. The bank raised its price target for BP (BP) from 570p to 640p, citing strong financial performance and a "Hold" consensus among analysts. BP recently reported quarterly earnings per share of $2.22, significantly exceeding the consensus estimate of $1.87.
Similarly, HSBC hiked its target for Chevron (CVX) to $250 from $218. Analysts highlighted Chevron's limited exposure to Middle Eastern regional risks as a key driver for the upgrade, with only 4% of its upstream production originating from the area. The stock has climbed approximately 35% year-to-date, buoyed by a strong balance sheet and a massive $184.4 billion revenue performance in the previous fiscal year.
Xi and Trump Discuss "Strategic Stability"
In Washington, Chinese President Xi Jinping and President Donald Trump held a series of closed-door meetings at the White House. According to state news agency Xinhua, Xi urged the US and Iran to resolve their issues through negotiation "as soon as possible" and expressed support for a return to the Islamabad Memorandum of Understanding.
The summit also touched on artificial intelligence (AI) safety and trade, with both leaders reaching a "common understanding" on several issues. While no formal trade agreement was announced, the meeting was seen as a significant effort to manage the superpower rivalry and maintain global stability.
Geopolitical Tensions Persist in Ukraine
While diplomacy dominated the headlines in the West, the conflict in Eastern Europe continued to escalate. Early Friday, a Russian drone attack triggered explosions near central Kyiv, marking the second consecutive night of heavy aerial bombardment. Kyiv Mayor Vitali Klitschko reported that debris from a downed UAV hit a 25-story residential building in the Solomianskyi district, resulting in at least one injury.
The attack follows a deadly barrage on Thursday that utilized ballistic missiles and over 280 drones, killing two people and damaging a maternity hospital. President Volodymyr Zelenskyy, currently attending the UN General Assembly, has called on the United States to provide more ballistic interceptors to counter the intensified Russian air campaign.
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications.