Energy Stocks Crushed by Tariffs and Falling Oil Prices 

Key Takeaways

• Energy stocks have been hit hard by a steep drop in oil prices.
• The Energy Select Sector SPDR ETF has lost 16% in two days.
• Oil producer and oilfield-services stocks and ETFs suffered the largest losses in the group.

As President Donald Trump’s trade war escalates and fears of an economic slowdown grow, energy stocks have been the worst-performing sector during the selloff amid a steep drop in oil prices.

West Texas Intermediate oil prices have fallen to under $62 a barrel from over $70 before the tariffs were announced. That drop has hit energy investments hard. In the span of two days, the $34 billion Energy Select Sector SPDR ETF XLE has fallen 16.2%. The $980 million United States Oil USO commodity ETF, which tracks the price of oil, has lost a combined 13.6% on Thursday and Friday. For comparison, the SPDR S&P 500 ETF Trust SPY fell 10.4% over the same period.

Thanks to their tight relationship with the price of oil, the stocks of oil producers and oilfield services firms have been hit particularly hard. The $1.2 billion VanEck Oil Services ETF OIH plummeted by 23.0% since tariffs were announced, while the $2.3 billion SPDR S&P Oil & Gas Exploration and Production ETF XOP fell 20.9%

The biggest name in US oil stocks, ExxonMobil XOM, has gotten off comparatively light, down 11.8% since the president announced new tariffs. The oil giant is one of Morningstar’s top picks for the energy sector, along with oil-services firm Schlumberger SLB and refiner HF Sinclair DINO. Schlumberger has fallen 19% since Wednesday’s close, while HF Sinclair fell 19.8%

Other large oil producers fell as well, with Chevron CVX down 13.7% since Wednesday’s market close, while ConocoPhillips COP plunged 19.3%.

Oil prices have fallen sharply on the combination of economic worries and the unexpected announcement from OPEC+ of its plans to increase oil production.

“American trade policy uncertainties have rippled through the market, including possible inflationary impacts that could weaken demand, and a Russia-Ukraine peace deal could further weigh on crude prices,” writes Morningstar director Joshua Aguilar. Against this backdrop, Morningstar cut its fair value estimates on shale oil stocks by up to 4%.

Despite the lower valuations, some of the firms still trade below their fair value estimates. Devon Energy DVN trades at $29.53, down 23% since the tariff announcement, compared with its lowered fair value estimate of $48 per share. Other producers saw similar reductions in their fair value estimates, with Diamondback Energy FANG down 23.7% over the same period to $125 a share, compared with its revised fair value of $165. Occidental Petroleum OXY has fallen 17.9% to just over $40 per share, compared with its $60 fair value.

Natural gas prices and stocks have done comparatively well. The $408 million United States Natural Gas ETF UNG was comparatively well off, down 4.6% since tariffs were announced. Range Resources RRC, a firm focused on gas production, escaped a cut in its fair value estimate, though its stock has plummeted 19.5% since Wednesday.

“Idiosyncratic trends in gas demand, driven by artificial intelligence, data centers, and new LNG production coming online, supports elevated North American natural gas prices to the end of 2025,” says Aguilar.