An oil bull's 'insane' bet: Why this veteran trader is buying energy stocks as crude prices tumble

By Barbara Kollmeyer

Kevin Muir says the view that oil will fall if the Iran deal plays out is too obvious

Diminished global oil stockpiles will ultimately help drive up prices, says former institutional trader Kevin Muir.

With a U.S.-Iran peace deal seemingly within grasp, it's not looking great for those who bet on rising oil prices. Global benchmark Brent and West Texas Intermediate crude have each dropped 16% in the last five sessions.

However, Kevin Muir, the institutional trader turned blogger, would beg to differ. He argues in our call of the day that now is precisely the time to start buying oil.

Muir admitted that, on its face, that probably looks like "an insane call," in his Macro Tourist Substack post published Wednesday.

"Over the years, I have found that when I am scared to write a post - when I am worried about looking like an idiot, those are often the best trades. Well, I can tell you, I am scared to admit I am buying energy."

Muir made a savvy call to buy oil in January, coinciding with President Donald Trump's foray into Venezuela. At the time, he argued that West Texas Intermediate oil at $57 a barrel couldn't go much lower as a lack of investment would eventually catch up to the neglected commodity. It has risen 31% since.

While he said he hasn't been among those bellowing that oil was headed to $200 a barrel, he didn't sell any of his positions either. He believes the view that oil prices will fall following a memorandum of understanding to end the Middle East conflict is far too obvious, and easy.

The peace deal expected to be signed on Friday prompted Goldman Sachs this week to slash its oil-price forecasts for this year and next.

"If my theory of 'the harder the trade, the better the trade' stays true, then this will be a humdinger," Muir admitted.

Oil prices were anchored at about $100 rather than $200 per barrel, because the U.S. and other governments drew on their reserves to ease the pain of the crisis, and China slashed its oil imports. U.S. stockpiles have been hovering at their lowest level in more than 40 years.

Not only will governments refill those inventories; they'll want to buy even more to protect against another crisis, Muir said.

As for how to play it, Muir said owning Brent crude futures or the United States Brent Oil Fund BNO works, but he is keener on energy equities XLE he sees as cheap. The S&P 500 energy subsector index XX:SP500.10 traded at 20 times earnings in the early months of the war but is now down to a multiple of 12, he said. Energy earnings could "easily" grind higher in coming months, and that P/E could rise to 16, he predicted.

Read: What have the U.S. and Iran agreed to? This is what markets are focused on.

The markets

U.S. stocks SPX DJIA have opened higher, with gains led by the Nasdaq COMP. Oil prices (CL.1) (BRN00) have moved higher. Bitcoin (BTCUSD) is falling.

 
Key asset performance                                                Last       5d       1m       YTD     1y 
S&P 500                                                              7511.35    1.69%    2.15%    9.73%   25.55% 
Nasdaq Composite                                                     26,376.34  2.72%    1.95%    13.49%  35.12% 
10-year Treasury                                                     4.436      -12.30   -15.60   26.40   4.00 
Gold                                                                 4348.5     6.21%    -4.35%   0.38%   28.41% 
Oil                                                                  75.75      -17.53%  -23.55%  31.95%  3.61% 
Data: MarketWatch. Treasury yields change expressed in basis points 

The buzz

U.S. retail sales for May rose 0.9%, versus expectations of a 0.5% gain, as Americans spend more on gas and less on dining out. May pending-home sales is still to come at 10 a.m.

A decision from the Federal Open Market Committee is coming at 2 p.m., followed by Kevin Warsh's first press conference as Fed chairman at 2:30 p.m. Economists aren't quite sure what to expect from Warsh, as his colleagues seem to be inching closer to wanting rate hikes.

Speaking on the sidelines of the Group of Seven meeting, President Trump said the U.S. could resume "dropping bombs" on Iran if they "don't behave."

According to Bloomberg and other media outlets, details of the U.S.-Iran memorandum of understanding show Iran will have access to a $300 billion development fund, be able to sell its oil immediately and eventually unlock frozen assets if it promises to never produce nuclear weapons.

Allbirds (BIRD) is now officially Smartbird, after divesting its sneaker brand and footwear in a pivot to becoming an AI company.

La-Z-Boy stock (LZB) is surging after the furniture-maker's earnings beat forecasts.

BMW (XE:BMW) issued a profit warning, blaming weak China sales.

Best of the web

Trump advisers weigh structure of potential AI stakes.

Ken Griffin's billions and billions.

The hacker sent by Anthropic to calm the government's nerves about AI safety.

Top tickers

These were the most searched ticker symbols on MarketWatch as of 6 a.m.:

 
Tickers  Security name 
SPCX     SpaceX 
NVDA     Nvidia 
TSLA     Tesla 
MU       Micron 
AMD      Advanced Micro Devices 
TSM      Taiwan Semiconductor Manufacturing 
GME      GameStop 
AAPL     Apple 
INTC     Intel 
PLTR     Palantir 

Random reads

Cigars and a canceled lacrosse season.

Scottish World Cup fans are drinking Boston dry.

Japan university's youngest student is a baby deer.

Beyond the headlines

MarketWatch Picks: My Social Security benefits 'were cut to the barest minimum' after I retired. Help me.

-Barbara Kollmeyer

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

06-17-26 0939ET