Oil’s comeback could spark broad rally in key sectors

The CEO of one of the world’s largest independent financial advisory organizations says that if oil prices stop rising and start falling, the consumer, transportation and industrial sectors should see a significant rally if talks between the US and Iran yield positive results.

analysis from devere group Nigel Green comes as President Donald Trump signaled “productive” discussions with Iran and suggested there was a serious possibility of a deal to end the conflict, a move that has already sparked sharp swings in energy markets.

Oil has risen above $110 a barrel since the crisis erupted, driven by threats to shipping through the Strait of Hormuz and risks to energy infrastructure across the region.

The sudden decline in crude oil following the diplomatic signals underlines how sensitive markets are to any sign of easing tensions.

Nigel Green comments: “Oil has been the key macro driver over the past few weeks. This has pushed inflation expectations higher, pressured equities and tightened financial conditions.

“If that pressure starts to ease, the rebound could be swift and powerful in some parts of the market.”

He continues: “The transportation sector may be among the first to respond. Fuel is one of their largest input costs, so any sustained decline in oil prices immediately improves margins and the outlook.

“Investors have already started to move back into these sectors as soon as the first signs of energy costs stabilising” appear.

Its implications extend far beyond transportation. Rising oil prices have served to tax consumption, depress household budgets, and reduce discretionary spending.

“Consumer-facing sectors will benefit significantly.

“Lower energy costs provide households with more disposable income, and this directly contributes to spending. Sectors associated with travel, leisure and retail activity should respond quickly if oil retreats from current levels.”

Industrial sectors are also at the center of this dynamism. The cost of energy depends on production, logistics and supply chains in the economy.

The CEO of Deavere explains: “Industrial activity is highly sensitive to input costs. High oil and gas prices are adversely impacting production and profitability.

“A reversal would ease that pressure and support a broader recovery in manufacturing and related sectors.”

Financial markets are already showing how tightly interconnected these relationships are. Recent data showed that crude oil prices fell sharply after Trump signaled progress in talks, while sectors already pressured by high energy costs began to recover.

Yet Nigel Green warns that markets are not pricing in a solution with certainty.

“Volatility remains very high because the geopolitical situation is unstable. Diplomatic progress can change sentiments rapidly, but it does not eliminate the risks.

“Investors are reacting to the headlines and that’s causing sharp moves in both directions,” he says.

The extensive macro background adds another layer of complexity. Higher oil prices have pushed inflation expectations upward, forcing the market to reconsider the path of interest rates.

“As energy prices rise, central banks face greater pressure to keep policy tight for longer periods of time,” says Nigel Green.

“If oil starts to fall, the pressure goes down. That changes the outlook for inflation, rates and growth. That’s why the potential impact of an oil decline is so significant.”

He further said that the current moment represents a clear inflection point.

“Markets are trying to determine whether this is a sustained energy shock or a temporary bounce linked to geopolitical tensions. If it proves to be temporary, the bounce in the sectors hardest hit could be substantial.”

At the same time, the geopolitical dimension remains important. Trump has indicated that discussions with Iran could include a number of conditions, including limits on nuclear activity, while also signaling an openness to broader political change. Meanwhile, Iran has continued to warn of retaliation if tensions escalate.

This uncertainty is at the heart of the market’s outlook.

“It all depends on whether de-escalation becomes reality or remains rhetoric. If there is a credible path to de-escalation, oil prices are likely to fall further, and this will serve as a catalyst for a broader market correction.”

The CEO concluded: “The past few weeks have shown how quickly rising energy costs can hit the global economy. The reverse is also true.

“If oil stops climbing and starts falling, the sectors exposed to those costs are likely to lead the next leg of the market.

“The opportunity exists, but it depends entirely on how this situation develops.”

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