Brent surged at one point on Thursday, closing above around $104. On Friday, after Trump said there would be no attack on Iran before the midterm elections and that talks were making progress, oil prices fell back to around $103. The easing of the geopolitical risk premium is a short-term sentiment boost for inflation expectations and risk assets.
But risks to shipping around the Strait of Hormuz, elevated freight rates, and weather disruptions in the Gulf of Mexico remain. Oil's retreat from $104 to $103 reflects a shift in sentiment, not a sudden reversal in supply and demand. For equities, stable oil prices give growth stocks some breathing room; another spike would reignite inflation trading.
My view: Don’t treat a single statement as the end of the crisis. Keep some energy exposure as a hedge, and factor “another spike in oil prices” into the stress scenario for growth-stock positions.
In the short term, prices are likely to trade within the $100–105 range; only a breakout will change sector allocations.
The above is for reference only and does not constitute investment advice.