Energy sector (XLE) news that moved the stock

What happened

Iranian state television reported that seven oil tankers caught fire and were damaged in the Strait of Hormuz — which, if verified, would be the largest number of vessels damaged in the waterway in a single day since the Iran war began on Feb. 28. Brent crude jumped 3.2% to $112.27 a barrel, its highest since May, and WTI briefly topped $100 a barrel. U.S. equity futures retreated sharply (S&P 500 futures -1%, Nasdaq futures -1.9%, Dow -0.7%), Asian markets slumped (Nikkei -2.7%, Kospi -3.5%, Hang Seng -3%, with Korea's memory-chip makers and SoftBank hit hard), and a flight to safety pushed the 10-year Treasury yield to 5.065%, its lowest in nearly a month.

What happened

The conflict at the chokepoint of global oil is widening beyond the Strait of Hormuz. Iran's Revolutionary Guards Navy said Tuesday that a supertanker caught fire after striking a sea mine south of the strait while 'violating' Iranian regulations, per Iranian media. LSEG analysts reported that tanker attacks have 'expanded beyond the Strait of Hormuz,' with Iran targeting vessels as far south as the Gulf of Oman — threatening loadings outside the Arab Gulf and the ship-to-ship transfers that have kept Middle East loadings flowing. Kpler counted at least 18 vessel attacks in two weeks, and the death toll from Monday's Houthi attack on Yemeni government forces rose to 73. Brent crude rose ~0.8% to $109.64/barrel (WTI +0.8% to $98.58) as trading resumed Wednesday after settling down 0.7% Tuesday at $108.79, off a five-month high of $111.99. Separately, U.S. heating oil futures climbed toward $5/gallon — near their mid-September record — after API data showed a 2.6-million-barrel draw in distillate stocks for the week ending October 16.

What happened

Following a phone call between Donald Trump and Vladimir Putin on Friday, Oct. 9, the U.S. Treasury Department authorized transactions involving Russian-origin diesel fuel through April 7, 2027 — effectively lifting the sanctions that had been depriving Moscow of fuel revenue. Trump announced on Truth Social that Russia will immediately release 300,000 tonnes of diesel to the U.S. and global markets, followed by 500,000 tonnes in November and 1 million tonnes after that, with a further 3 million tonnes 'within a short period of time' depending on the condition of Russian refineries. The deal drew immediate backlash: retiring Sen. Thom Tillis (R-NC) said Sunday there is 'a legitimate case for saying the president's not following the law,' and Rep. Don Bacon (R-NE) called it 'morally wrong' to prop up Putin's war economy. Treasury Secretary Scott Bessent defended the move on Fox News Sunday, insisting the administration has the legal authority and that the deal will lower prices. Germany said Saturday it will maintain its Russia sanctions, and Zelensky pushed back Sunday at Trump's demand that Ukraine stop striking Russian refineries, saying Kyiv would stop only if Russia stops striking Ukrainian energy infrastructure.

What happened

West Texas Intermediate crude futures dived nearly 4% on Tuesday to settle around $89.38 a barrel, the lowest settlement of September, according to Investor's Business Daily's post-close market wrap. The selloff was driven by concrete signs of improving Gulf supply: Saudi Arabia restarted its East-West oil pipeline (first flows since the September 10 drone attacks) and resumed Red Sea oil exports, while tanker movement was seen on the Strait of Hormuz. WSJ reported that Gulf exports reached 80% of prewar levels in September (Kpler), with Brent falling about 1.9% to ~$103.24 and WTI down about 2% in European trading before extending losses into the U.S. settle.

What happened

Overnight, reports circulated that Iran had agreed to halt uranium enrichment in exchange for easing US sanctions; Iran's Foreign Ministry spokesperson subsequently denied those reports. Separately, Iranian Foreign Minister Araghchi said Tehran had discussed proposals with Qatari mediators to present to the US and that a response is to be relayed back to Tehran through the mediators, with Iran expecting a US response today. For his part, President Trump again denied reports that he is prepared to ease sanctions on Iran and release its frozen assets in exchange for progress on the nuclear issue.