What Happened?
A number of stocks jumped in the afternoon session after the U.S. launched a new wave of military strikes against Iranian targets, as President Donald Trump announced a 20% U.S. toll on cargo transiting the Strait of Hormuz.
After Iran declared the Strait of Hormuz closed "until further notice" over the weekend, President Trump stated the U.S. will reimpose a blockade on Iranian ports and act as the waterway's "guardian." To fund this security, the U.S. will immediately begin charging a 20% fee on all cargo shipped through the strait. The escalation reverses a recent decline in oil prices that followed OPEC+'s decision to raise production, reinserting geopolitical risk into the energy market.
The Strait of Hormuz normally carries about a fifth of global crude and liquefied natural gas supplies. While the physical flow of oil has not been fully halted, the threat of a prolonged disruption directly lifts the revenue outlook for U.S. domestic producers and international majors by raising the baseline price of their reserves. Exploration and production companies with high leverage to crude prices saw steeper gains than diversified majors, reflecting their direct exposure to spot prices. However, the rally's durability depends on whether actual supply is curtailed; if the strait remains navigable, the geopolitical premium could quickly recede.
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:
- Mixed or Offshore Upstream E&P company SM Energy (NYSE: SM) jumped 5.9%. Is now the time to buy SM Energy? Access our full analysis report here, it’s free.
- U.S. Shale E&P company Northern Oil and Gas (NYSE: NOG) jumped 6.9%. Is now the time to buy Northern Oil and Gas? Access our full analysis report here, it’s free.
- Mixed or Offshore Upstream E&P company Kosmos Energy (NYSE: KOS) jumped 7.6%. Is now the time to buy Kosmos Energy? Access our full analysis report here, it’s free.
Zooming In On Kosmos Energy (KOS)
Kosmos Energy’s shares are extremely volatile and have had 72 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 4 days ago when the stock dropped 6.5% on the news that 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.
Kosmos Energy is up 150% since the beginning of the year, but at $2.24 per share, it is still trading 31.7% below its 52-week high of $3.27 from May 2026. Despite the year-to-date gain, investors who bought $1,000 worth of Kosmos Energy’s shares 5 years ago would now be looking at only $798.21.
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