Consumer, transport, and industrial sectors are poised for a significant rally if oil prices stabilise and begin to decline, particularly if recent discussions between the US and Iran yield positive outcomes, according to the CEO of one of the world’s largest independent financial advisory organisations.
This analysis from Nigel Green of deVere Group comes as President Donald Trump indicates that discussions with Iran have been “productive,” suggesting there is a serious possibility of an agreement to reduce tensions—news that has already led to sharp movements in energy markets.
Since the crisis escalated, oil prices have surged above $110 a barrel amid threats to shipping through the Strait of Hormuz and concerns about the region’s energy infrastructure. A sudden pullback in crude prices following diplomatic signals highlights how sensitive markets are to any sign of de-escalation.
Nigel Green stated, “Oil has been the dominant macroeconomic driver of the past few weeks. It has raised inflation expectations, negatively impacted equities, and tightened financial conditions. If that pressure begins to ease, we could see a swift and powerful rebound in certain sectors.”
He notes that the transport sector is likely to be among the first to respond, as fuel is one of its largest input costs. Any sustained decline in oil prices would immediately improve profit margins and outlooks. “Investors have already started to pivot back into these areas at the first hint that energy costs might stabilise,” Green added.
The consequences of falling oil prices extend beyond transport. Rising oil prices have effectively acted as a tax on consumption, squeezing household budgets and dampening discretionary spending. “Consumer-facing sectors stand to benefit significantly. Lower energy costs would leave households with more disposable income, which would directly boost spending in areas related to travel, leisure, and retail.”
Industrial sectors are also significantly affected by this dynamic, as energy costs play a crucial role in production, logistics, and supply chains throughout the economy. Green explained, “Industrial activity is highly sensitive to input costs. High oil and gas prices have been a drag on output and profitability. A reversal would relieve that pressure and support a broader recovery in manufacturing and related sectors.”
Financial markets are already displaying how closely these relationships are interwoven. Recent data indicate that crude prices fell sharply after Trump suggested progress in negotiations, while sectors previously pressured by elevated energy costs began to recover.
However, Nigel Green cautions that markets are not fully pricing in a resolution with certainty. “Volatility remains extremely high because the geopolitical situation is fluid. Diplomatic progress can shift sentiment quickly, but it does not eliminate risk. Investors are seemingly reacting to headlines, leading to sharp fluctuations in both directions,” he stated.
The broader macroeconomic backdrop adds another layer of complexity. Rising oil prices have driven up inflation expectations, prompting markets to reevaluate interest rate trajectories. “As energy prices rise, central banks face increased pressure to maintain tighter policies for longer,” Green notes. “If oil begins to fall, that pressure eases and alters the outlook for inflation, interest rates, and growth. This is why the potential impact of a decline in oil prices is so significant.”
He emphasises that the current moment represents a critical inflexion point. “Markets are attempting to discern whether we are experiencing a sustained energy shock or merely a temporary spike linked to geopolitical tension. If it proves to be temporary, the rebound in the sectors most affected could be substantial.”
Simultaneously, the geopolitical aspect remains crucial. Trump has indicated that discussions with Iran could involve multiple conditions, including limitations on nuclear activities and openness to broader political changes. Iran, in turn, has continued to warn of potential retaliation if tensions escalate.
This uncertainty is central to the market outlook. “Everything hinges on whether de-escalation becomes a reality or remains mere rhetoric. If a credible path to lower tensions emerges, oil prices are likely to fall further, acting as a catalyst for a wider market recovery,” Green concluded.
He stated, “The past few weeks have illustrated how quickly rising energy costs can ripple through the global economy, and the same is true in reverse. If oil prices stop climbing and begin to decline, the sectors most affected by these costs are likely to lead the next phase of the market. The opportunity exists, but it entirely depends on how this situation unfolds.”
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