Oil prices extended their decline on Friday as more tankers exited the strategically important Strait of Hormuz, easing supply concerns despite an attack on a vessel in the Gulf of Oman.

The losses came as investors closely monitored developments in the Middle East and assessed whether recent diplomatic efforts would be sufficient to reduce the risk of disruptions to global energy supply chains.

August Brent crude futures fell 4% to $72.02 a barrel, while August US West Texas Intermediate crude futures declined 3.6% to $69.34 a barrel.

Attack near the Strait of Hormuz revives concerns

A US official told MS NOW that Iran was behind the attack on a cargo vessel near the coast of Oman in the Strait of Hormuz.

The Wall Street Journal reported that the vessel was sailing under the Singapore flag.

The UK Maritime Trade Operations agency said the ship reported no casualties or environmental damage.

Later on Friday, US President Donald Trump said Iran had violated the ceasefire agreement by carrying out drone attacks in the Strait of Hormuz.

“There was damage, but the vessel was able to continue its voyage. We shot down three more drones. This is obviously a foolish violation of the ceasefire agreement,” Trump wrote in a post on Truth Social.

Arsenio Dominguez, Secretary-General of the International Maritime Organization, said: “Following the launch of the IMO evacuation plan, under which a number of vessels were successfully evacuated, we have decided to temporarily suspend the operation to reconfirm that the necessary safety assurances remain available for ships on the evacuation list and for all vessels operating in the region.”

Questions remain over political agreements and future energy supplies

At the same time, tensions in the Middle East remained elevated as disagreements continued between Iran and the United States over the use of funds covered by the memorandum of understanding between the two countries.

Iran’s parliamentary speaker on Thursday rejected claims by the Trump administration that released Iranian assets would be used to purchase US agricultural products.

However, US officials maintained that any funds released would remain subject to US approval.

“As Vice President JD Vance stated this week, if Iranian assets are released, they will be used to purchase American agricultural products to feed the Iranian people,” a US official said.

“There are still many unanswered questions regarding the actual agreement,” said Scott Nations, President of Nations Indexes, during an interview on CNBC’s Squawk Box Asia.

“I think we are more optimistic than we should be because nothing has really been resolved, and Iran knows it has the ability to impact the global economy if it chooses to close the strait,” he added.

A new challenge for OPEC after Iraq dispute

OPEC could also face the possibility of losing another major producer after the United Arab Emirates exited the organization in May.

Reports indicate that Iraq is seeking a higher production quota from OPEC and has informed fellow members that it could withdraw from the group if its demands are not met.

Over the past two decades, the direction seemed clear: major oil companies would gradually evolve into broad-based energy companies. The expectation was that they would use their vast balance sheets, engineering expertise, and global project-management capabilities to build wind farms, solar projects, hydrogen hubs, carbon-capture networks, and renewable energy businesses.

And to some extent, that happened. Major oil companies invested billions of dollars in renewable energy. Parts of the energy sector continue to move in that direction. But among the oil majors themselves, the strategy has become far more selective.

The latest example came from Norway’s Equinor, which recently abandoned its target of building between 10 and 12 gigawatts of renewable energy capacity by 2030.

Instead, the company is shifting toward a broader power-sector strategy that includes renewables, gas-fired generation, storage, and energy trading.

Equinor is not arguing that renewable energy has no future. Rather, it believes that targeting a specific level of renewable capacity no longer aligns with its goal of delivering profitable growth.

That reflects the broader story unfolding across the industry. Oil majors are not stepping back from renewables because the energy transition has stopped. They are doing so because many renewable energy projects have failed to generate the returns investors expect from large oil companies.

Equinor’s strategic shift

Equinor’s decision is particularly significant because the company has been one of the European energy sector’s strongest advocates of offshore wind development. It once positioned itself as a future leader in the sector, but is now recalibrating its ambitions.

The company still expects a substantial increase in electricity production by 2030, but the key metric has shifted from renewable capacity to electricity generation. The business now encompasses gas-fired power generation, storage, and trading alongside renewables.

Equinor also said that only around 10% of its capital expenditure will be allocated to its power business.

The reason is straightforward. Offshore wind projects have become significantly more expensive. Interest rates have risen, supply chains have tightened, equipment costs have increased, and project economics have deteriorated.

In that environment, committing to a fixed capacity target can become a burden, forcing companies to build additional capacity even when expected returns do not justify the capital investment.

Equinor’s revised strategy serves as a reminder that oil companies are not utilities. They do not build renewable capacity simply for the sake of expansion. They allocate capital to businesses where they believe attractive returns can be generated.

BP’s retreat from its green transformation

BP provides perhaps the clearest example of this strategic shift.

It is worth remembering that the company has traveled this road before. More than two decades ago, BP attempted to rebrand itself under the slogan “Beyond Petroleum,” signaling an ambition to become more than an oil and gas producer.

That effort ultimately did not change the company’s core identity. BP remained fundamentally an oil and gas business.

Even so, the slogan highlighted a persistent challenge within the industry: how can a company built on hydrocarbons prepare for a future shaped by changing demand patterns, evolving regulation, and shifting investor expectations?

Under former CEO Bernard Looney, BP launched one of the sector’s most ambitious attempts to answer that question.

The company announced plans to reduce oil and gas production while rapidly expanding its low-carbon energy business. For a time, BP appeared determined to redefine itself faster than many of its peers.

That strategy has now been largely reversed.

BP has increased planned annual investment in oil and gas while cutting spending allocated to the energy transition.

The company has also retreated from earlier plans to reduce hydrocarbon production and is now targeting higher oil and gas output by 2030.

BP recently agreed to sell its US onshore wind business, which includes 10 operating assets.

The message is clear: the company is seeking to rebuild investor confidence by focusing on businesses where it believes returns are stronger and competitive advantages are clearer.

That does not mean BP has abandoned low-carbon energy. It simply no longer appears interested in convincing investors that it should be valued like a high-growth renewable energy company.

Instead, it has returned to the language of cash flow, returns, asset sales, and disciplined capital allocation.

Shell becomes more selective

Shell has followed a similar path, though its retreat has been more selective and less dramatic.

The company has cut jobs in its low-carbon energy division, scaled back parts of its hydrogen strategy, exited certain offshore wind projects, and reviewed strategic options for renewable energy assets in India.

At the same time, it has placed greater emphasis on liquefied natural gas, oil and gas production, and energy trading.

That strategy aligns with Shell’s traditional strengths. The company is one of the world’s largest LNG players, has deep expertise in global energy trading, and possesses extensive experience in large-scale oil and gas developments, shipping, storage, and commodity markets.

Renewable energy is a different business.

Solar and wind projects often resemble infrastructure investments. They can generate stable cash flows, but returns may be compressed by competition, regulation, tax structures, and higher financing costs.

Those projects may be highly attractive to utilities, infrastructure funds, and pension-backed investors, but they do not always satisfy the return expectations of oil-company shareholders.

That is why the idea of a simple transition from “Big Oil” to “Big Renewables” was always somewhat misleading.

Some skills overlap, particularly in areas such as offshore engineering, but the economics are fundamentally different.

TotalEnergies takes a different approach

TotalEnergies stands out as the most prominent example of the opposite strategy.

Unlike some of its competitors, the company has continued building a large and integrated electricity business. It is targeting electricity generation of between 100 and 120 terawatt-hours by 2030, up from 41 terawatt-hours in 2024.

The company has also continued developing renewable energy projects in markets where it already maintains broader energy relationships, including oil and gas investments.

TotalEnergies is not ignoring returns. However, its model may be more disciplined because it is not simply accumulating renewable assets. Instead, it focuses on key markets and divests assets that do not fit its strategy.

That may ultimately prove to be the most successful model for oil majors: not a complete shift from oil into wind and solar, but the construction of an integrated energy platform where electricity, gas, trading, and renewable assets reinforce one another.

In other words, the most successful companies may not be those with the largest renewable energy targets, but those capable of linking generation, customers, storage, trading, and fuel supply within a profitable system.

Renewables are not dead

It is important not to confuse oil majors scaling back parts of their green-energy investments with a collapse of renewable energy itself.

Global investment in clean energy remains enormous. Solar, wind, batteries, power grids, nuclear energy, energy efficiency, and low-emissions fuels continue to attract far more capital than they did a decade ago.

The International Energy Agency estimates that investment in low-emissions energy is currently roughly double the level of investment in fossil fuels.

The conclusion, therefore, is not that the energy transition has failed. Rather, it is proving to be far more complex than many early projections suggested.

Renewables are growing, but ownership structures, capital costs, support mechanisms, electricity pricing, grid connection queues, and supply chains all matter.

Publicly listed oil companies must also answer to shareholders.

A renewable project that works well for a regulated utility or infrastructure fund may not necessarily fit an oil major competing for capital against deepwater oil developments, LNG projects, refining operations, petrochemical investments, or share buybacks.

Why did the green transition stumble for oil majors?

Oil companies entered the renewable energy sector with genuine advantages: massive balance sheets, engineering expertise, project-management capabilities, and political relationships.

But they also faced real disadvantages.

Renewable energy projects often operate with lower margins. A high-quality solar or wind project can be attractive, but it may not deliver the same returns as a successful oil and gas development.

Renewable projects are also more sensitive to interest rates. When rates were near zero, the long-term cash flows generated by infrastructure assets looked highly attractive. As rates increased, the economics changed.

Competition has intensified as well.

Oil companies are not the only organizations with access to capital. Utilities, private equity firms, pension funds, infrastructure investors, and specialist renewable developers all compete for the same projects.

Finally, oil companies are valued by investors who often prioritize cash returns, dividends, share buybacks, and spending discipline.

Those investors may not reward a company simply for building renewable energy capacity.

The bigger picture

The retreat by some oil majors from renewable energy is not a story about the failure of green energy. It is a story about the return of capital-allocation discipline.

The energy transition continues, but it is unlikely to take the form of oil companies simply replacing themselves with renewable divisions.

Some oil majors will build substantial electricity businesses. Others will focus on LNG, trading, carbon capture, hydrogen, and biofuels.

Still others will remain closer to their traditional strengths.

That may disappoint those who expected oil companies to lead the transition, but it should not surprise anyone familiar with how capital is allocated.

Companies generally move toward businesses where they possess a competitive advantage and can generate acceptable returns.

For most oil majors, that still means a heavy focus on oil, natural gas, and LNG.

In the power sector, it may mean selective participation rather than an all-in commitment to renewable capacity.

That is the tension shaping oil-major strategy today: they are not abandoning the future, but they have become much more selective about which parts of the future they want to own.

The S&P 500 and Nasdaq Composite were on track for significant weekly losses as semiconductor stocks came under renewed selling pressure on Friday following an exceptionally strong quarter, with investors questioning lofty valuations and the long-term implications of massive corporate spending on artificial intelligence.

Micron Technology shares fell 6.2% after surging more than 15% in the previous session. Other chipmakers, including Advanced Micro Devices and Nvidia, also came under heavy pressure, while the Philadelphia Semiconductor Index dropped 4.7%.

High-performing semiconductor stocks have struggled this week despite Micron’s strong earnings results, as concerns about inflation resurfaced after Apple announced price increases for its iPad and MacBook product lines due to sharply rising memory and storage chip costs.

Apple shares slipped 0.1% in early trading following Thursday’s 6.1% decline, their biggest one-day drop in more than a year after the company announced the price increases.

“The selloff in technology stocks reflects expectations of higher interest rates in the future,” said Peter Cardillo, Chief Market Economist at Spartan Capital Securities in New York.

“The market did not like Apple’s price increases because they could ultimately translate into higher consumer prices,” he added.

Data released on Thursday showed US inflation rose above 4% in May for the first time in three years, driven by higher energy prices linked to the Middle East conflict, keeping the possibility of additional Federal Reserve rate hikes on the table.

Although oil prices have fallen sharply as tensions in the Middle East eased, Apple’s unexpected pricing move has reignited concerns about inflation.

“We saw a similar dynamic during the pandemic when supply-chain disruptions restricted access to semiconductors,” said Art Hogan, Chief Market Strategist at B. Riley Wealth.

“Now we’re seeing a comparable supply shock, this time driven by the memory sector, creating a new source of inflationary pressure.”

Technology weakness weighs on major indexes

At 9:34 a.m. ET, the Dow Jones Industrial Average fell 229.49 points, or 0.44%, to 51,691.13.

The S&P 500 declined 60.87 points, or 0.83%, to 7,296.62, while the Nasdaq Composite dropped 336.63 points, or 1.33%, to 25,021.97.

Risk appetite within the technology sector was also hurt by a report suggesting that OpenAI is considering delaying its initial public offering until next year.

Shares of Elon Musk’s SpaceX, which began trading earlier this month, fell 1.6%.

Recent market volatility has encouraged investors to rotate into sectors that previously attracted less attention but could benefit from easing inflation concerns and improving economic growth expectations.

At the same time, declining tensions in the Middle East helped the blue-chip Dow Jones Industrial Average reach fresh record highs.

Investors were also preparing for elevated trading volumes on Friday due to Russell index rebalancing, including the reclassification of mega-cap companies such as Microsoft and the rapid addition of SpaceX to the Russell 1000 Index.

Markets await Fed signals and key economic data

Interest rate concerns continued to influence markets, with traders pricing in one 25-basis-point rate increase and roughly a 27% probability of an additional hike before year-end, according to data compiled by the London Stock Exchange.

The final June reading of consumer sentiment is due later today, while investors are also awaiting next week’s monthly employment report.

In corporate news, Synaptics shares rose 4.7% after ON Semiconductor agreed to acquire the company in an all-stock transaction valued at approximately $7 billion.

ON Semiconductor shares, however, fell 19%.

Declining stocks outnumbered advancing issues by a ratio of 1.37-to-1 on the New York Stock Exchange and 1.1-to-1 on the Nasdaq.

Within the S&P 500, 12 stocks reached new 52-week highs while four touched new lows. On the Nasdaq, 72 stocks hit new highs and 91 registered new lows.

Despite copper prices trading near record highs, the value of the metal to copper smelters has fallen sharply following an unprecedented collapse in ore treatment and refining charges.

Companies that convert mined copper concentrates into refined metal are now increasingly relying on by-products generated during the processing stage to remain financially viable.

Secondary products such as gold, silver, and sulfuric acid have become nearly as important as copper itself in determining profitability for traditional smelters.

This unusual situation stems from China’s rapid expansion of copper smelting capacity, which has significantly outpaced the ability of global mines to supply sufficient raw materials.

The imbalance is unlikely to disappear anytime soon. Mine production remains constrained, and despite discussions about output cuts at Chinese smelters, the country’s refined copper production continues to rise.

The shift carries major implications for the copper concentrate market and the future structure of global copper production.

Negative treatment charges reshape smelter economics

Annual benchmark copper treatment and refining charges (TC/RCs) have collapsed from $80 per metric ton and 8 cents per pound in 2024 to $21.25 per ton and 2.125 cents per pound in 2025.

This year, benchmark charges have effectively fallen to zero.

Spot treatment charges have remained negative for several months, meaning smelters are effectively paying mining companies for the right to process copper concentrates.

As a result, the headline TC/RC figures have become increasingly irrelevant. What now matters most is the value assigned to precious metals contained within concentrates, as well as sulfur that can be extracted and converted into sulfuric acid.

Rising gold and silver prices have helped offset the loss of a key revenue source for smelters.

Sulfuric acid has provided even greater support, aided by disruptions to Gulf supplies caused by the war with Iran and the closure of the Strait of Hormuz.

In fact, some Chinese copper smelters have begun processing larger quantities of pyrite, commonly known as “fool’s gold,” simply because it contains higher sulfur content.

Consultancy CRU estimates that treatment charges accounted for 39% of total smelter revenue in 2018.

By last year, however, the largest revenue contributors had become “free metal” gains and by-product credits, particularly sulfur. The former accounted for roughly 50% to 53% of revenues, while the latter contributed around 25% to 27%.

“Free metal” refers to the difference between the payable metal content in raw material and the actual recovery rate achieved by the smelter for copper and other metals.

Has the era of annual benchmark pricing come to an end?

One of the most striking aspects of the transformation in the copper smelting industry is how quickly it occurred.

The shift reflects both the speed and scale of China’s expansion in copper processing capacity.

China’s refined copper output rose 8% year over year to 14.72 million metric tons in 2025.

By comparison, global mine production increased by just 1%, according to the International Copper Study Group.

China’s Copper Smelters Purchase Team (CSPT), which includes the country’s largest producers, agreed in November to cut production by 10% this year in an effort to halt the collapse in treatment charges.

However, actual output rose 7.4% year over year between January and April 2026, according to China’s National Bureau of Statistics.

The rapid transformation of the copper concentrate market is prompting participants to reconsider the industry’s reliance on annual benchmark agreements for pricing.

Chilean mining company Antofagasta has proposed shifting to spot-index pricing during its semiannual negotiations with Chinese smelters, according to local data provider Shanghai Metals Market.

CSPT, which recently added new members to strengthen its bargaining power, is likely to oppose the move. But without meaningful Chinese production cuts, the gap between annual benchmark prices and actual market conditions is likely to widen further.

Survival of the fittest in the global smelting industry

The key question now is whether this new financial model for smelters can remain sustainable over the medium term.

For smelters equipped with modern technology, capable of achieving high precious-metal recovery rates, and supported by reliable sulfuric acid sales channels, the model may remain viable.

CRU noted that “the collapse in treatment and refining charges has been painful on paper but manageable in practice” for such facilities.

However, the consultancy warned that “the outlook is far darker for smelters with aging infrastructure, high fixed costs, or geographical disadvantages in sulfuric acid marketing.”

These facilities remain far more dependent on treatment charges because they lack the competitive advantages enjoyed by newer operations.

Many of those smelters are located outside China, posing an additional threat to a segment of the Western copper supply chain that is already under pressure.

Glencore has already placed its smelter in the Philippines under care-and-maintenance status, while it only committed to keeping its Australian smelting operations running after securing a rescue package worth A$600 million, equivalent to roughly US$395 million, from federal and state governments.

Meanwhile, China accounted for around half of global refined copper production in 2025, up from just 15% in 2005, and is expected to gain further market share this year.

Chinese smelters appear fully aware that they are engaged in a battle in which only the strongest will survive.

The challenge for the West is that its smelting industry could emerge as one of the biggest casualties of China’s fierce competition for raw materials and revenue streams in a concentrate market that remains structurally short of supply.