European airline and luxury goods stocks moved higher on Monday, while energy companies came under pressure after the United States and Iran announced a preliminary agreement aimed at ending hostilities and reopening the Strait of Hormuz.
The prospect of renewed access to one of the world’s most important energy shipping routes triggered a sharp decline in oil prices, pushing crude benchmarks to their lowest levels in three months.
By 08:31 GMT, Brent crude had fallen 4.5% to $83.41 per barrel, while U.S. West Texas Intermediate dropped 5.5% to $80.28 per barrel. Both contracts touched their weakest levels since 10 March, extending declines of more than 3% recorded on Friday.
Energy Sector Retreats as Crude Prices Fall
The decline in oil prices weighed heavily on European energy shares.
Among the biggest movers were Equinor (TG:DNQ), TotalEnergies (EU:TTE), Eni (BIT:ENI), BP (LSE:BP.), Shell (LSE:SHEL), Neste (TG:NEF) and Repsol (TG:REP), all of which recorded losses ranging from 3.5% to 6%.
Investors reassessed the outlook for energy markets amid expectations that a reopening of the Strait of Hormuz could improve global oil supply flows and reduce geopolitical risk premiums.
Travel and Luxury Companies Benefit
While oil producers struggled, sectors that typically benefit from lower fuel costs and improving consumer sentiment outperformed.
Luxury goods companies posted solid gains, with LVMH (EU:MC) rising 2.4%. Shares in Hermès (EU:RMS), Ferrari (BIT:RACE), Dior (EU:CDI), Kering (EU:KER) and Brunello Cucinelli (BIT:BC) advanced between 2% and 4%.
Travel-related stocks also attracted buyers, with Lufthansa (TG:LHA), TUI (TG:TUI1), IAG (LSE:IAG), Accor (EU:AC) and easyJet (LSE:EZJ) climbing between 1.7% and 6.1%.
Hormuz Reopening Boosts Market Sentiment
President Trump said on Sunday that the Strait of Hormuz, a vital route for global oil and gas shipments that Iran has effectively restricted for several months, would reopen without tolls. He also announced that the U.S. naval blockade of Iranian ports would be lifted.
The development was interpreted by markets as a significant step towards easing tensions in the region and restoring normal trade flows.
Agreement Expected to Be Signed This Week
According to Pakistani Prime Minister Shehbaz Sharif, whose government helped facilitate the negotiations, a memorandum of understanding is expected to be signed in Switzerland on Friday.
Iran’s semi-official Mehr news agency reported that the draft agreement envisages the reopening of the Strait of Hormuz within 30 days under arrangements managed by Iran.
Iranian Deputy Foreign Minister Kazem Gharibabadi added that negotiations on a broader settlement would take place during a 60-day ceasefire period.
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