What Happened?
A number of stocks fell in the afternoon session after crude oil prices pulled back from the previous day's rally.
West Texas Intermediate (WTI) crude fell 2.2% to settle near $71.88 per barrel, while the international benchmark Brent crude slipped below $77 per barrel. The pullback occurred despite the U.S. military confirming secondary strikes on Iran and President Trump declaring the recent ceasefire "over."
Instead of pricing in further escalation, investors took profits as satellite vessel tracking data indicated that tanker traffic through the Strait of Hormuz was quietly continuing despite the geopolitical rhetoric. The session confirmed that the energy sector's valuation was being dictated almost entirely by the geopolitical risk premium in the Middle East, rather than underlying supply and demand fundamentals.
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:
- U.S. Shale E&P company HighPeak Energy (NASDAQ: HPK) fell 7.1%. Is now the time to buy HighPeak Energy? Access our full analysis report here, it’s free.
- Infrastructure company DHT Holdings (NYSE: DHT) fell 5%. Is now the time to buy DHT Holdings? Access our full analysis report here, it’s free.
- Mixed or Offshore Upstream E&P company Kosmos Energy (NYSE: KOS) fell 6.5%. Is now the time to buy Kosmos Energy? Access our full analysis report here, it’s free.
Zooming In On HighPeak Energy (HPK)
HighPeak Energy’s shares are extremely volatile and have had 73 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 1 day ago when the stock gained 10.9% on the news that President Trump declared the Iran ceasefire "over" and threatened fresh strikes, pushing WTI prices up.
Shale producers are the most direct beneficiaries of a higher WTI print because they sell into the U.S. benchmark and run short-cycle operations that convert price gains into cash quickly. With breakevens across much of the Permian well below the session's price, a move above $75 widens margins and lifts the free cash flow that these companies increasingly hand back to shareholders through buybacks and dividends.
That shareholder-return model is a big reason investors reward shale names when crude climbs, since higher prices translate almost immediately into bigger cash returns. The important caveat is that this rally is built on a geopolitical supply scare rather than a demand upswing, so a de-escalation, or an OPEC+ decision to add barrels, could reverse the move as fast as it came.
HighPeak Energy is up 54.3% since the beginning of the year, but at $6.90 per share, it is still trading 33.4% below its 52-week high of $10.35 from July 2025. Despite the year-to-date gain, investors who bought $1,000 worth of HighPeak Energy’s shares 5 years ago would now be looking at only $646.90.
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