Energy Stocks Retreat on U.S.-Iran Peace Agreement

The energy sector posted mixed performance as geopolitical developments overshadowed operational fundamentals. The S&P 500 rose 0.9% for the week amid a U.S.-Iran memorandum of understanding that would waive sanctions on Tehran's oil exports and reopen the Strait of Hormuz. The diplomatic breakthrough pressured oil-exposed equities, with integrated majors and service providers trading sharply lower while utilities and renewable energy names showed relative strength. NextEra Energy ($NEE) closed at $86.75, up 1.19%, while First Solar ($FSLR) gained 1.14% to $257.7.

ExxonMobil ($XOM) faced continued selling pressure despite operational achievements, with the stock down 2% over the past day, 6% over the past week, and 15% over the past month. The integrated major recently reported annual production at its highest level in over 40 years, allowing the company to play a central role in supplying global oil markets during the Iran conflict. CEO Darren Woods told investors in May he is proud to have kept his pedal to the metal with increased output from Guyana, Texas, and Papua New Guinea. Analysis suggests $XOM shares could be 18.9% undervalued despite the recent pullback, though institutional investors are likely buyers according to Invest With Rules' Scott Bennett. ConocoPhillips ($COP) closed at $107.74, while Devon Energy ($DVN) traded at $42.12.

SLB ($SLB) fell 4.45% in the latest session despite launching the SLB Digital Marketplace, a platform enabling energy companies to deploy AI agents and digital tools directly into existing operations. The stock recorded a 7-day return of 14.12% and a 30-day return of 15.29%, though analysis suggests shares could be 21.7% undervalued. Oilfield service names including Halliburton ($HAL) declined following the U.S.-Iran agreement announcement. Refining stocks also traded lower, with Valero Energy ($VLO) closing at $236.3, down 1.45%. Phillips 66 ($PSX) has navigated past material risks through strategic diversification and is viewed as a reliable growth and income play, though geopolitical uncertainty remains.

Duke Energy ($DUK) received renewed attention after the U.S. Department of Energy selected the company for up to $61.8 million in grants tied to coal plant reliability projects. Despite the DOE grant announcement, short-term share price performance has been muted, with the stock down over the past quarter but supported by a year-to-date return of 5.47% and a 1-year total shareholder return of 11.88%. Analysis suggests $DUK could be 10.6% undervalued. Separately, consumer advocates including the Virginia Distributed Alliance and Secure Solar Futures have urged Virginia Governor Spanberger and the General Assembly to extend the deadline for reviewing the proposed NextEra Energy ($NEE) acquisition of Dominion Energy, requesting 12 months to examine the complex merger and ensure adequate ratepayer protections for what would become the largest electric utility company in the United States.

The U.S. and Iran signed an interim agreement that would waive sanctions on Tehran's oil and reopen the Strait of Hormuz, triggering sharp declines across oil producers and service firms. The diplomatic breakthrough eased supply concerns that had supported crude prices during the Iran conflict, with producers including ExxonMobil ($XOM) and Occidental Petroleum ($OXY) trading lower. The agreement represents a significant shift in Middle East energy dynamics, potentially adding substantial Iranian supply back to global markets and reducing the geopolitical risk premium that had benefited domestic producers.