Why Oil Stocks Plummeted in April

Billy Duberstein, The Motley Fool

Sun, May 4, 2025, 11:00 AM 5 min read

• While stocks have mostly recovered from April 2 "Liberation Day," oil prices haven't.

• The struggling oil price led to a severe down month for most oil and gas stocks.

• Saudi Arabia is threatening to increase supply even as demand questions loom.

Shares of large-cap oil and gas majors Chevron (NYSE: CVX), APA Corporation (NASDAQ: APA), and oilfield service provider Halliburton (NYSE: HAL) fell hard in April, down 18.7%, 26.1%, and 21.9%, respectively, according to data from S&P Global Market Intelligence.

Of the three stocks, only Halliburton reported earnings during the month. But that was largely inconsequential to the price decline, as the across-the-board sector declines came on the heels of the biggest monthly decline in oil prices since November 2021.

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The price of Brent and WTI oil dropped 15% and 18%, respectively, in the month of April, according to CNBC. That's actually the largest one-month decline in oil since November 2021. Thus, it's no wonder these three stocks, which are all levered to the price of oil to some degree, fell in tandem.

The major part of the sell-off was due to the fallout from "Liberation Day" on April 2, when President Trump announced much higher-than-expected tariffs on a wide range of countries, including friendly allies as well as adversarial trading partners like China.

In the wake of Liberation Day, oil prices and stocks fell hard, as investors came to fear either recession or a stagflationary slowdown. Given that oil isn't one of the goods subject to high tariffs, however, an economic slowdown brought on by tariffs would likely crimp demand in a big way, leading to lower prices.

Stocks, however, recovered from the April plunge by the end of the month, as the administration gave out some tariff exemptions and intimated that it would be making trade deals soon, likely with allies.

But why didn't oil prices recover, as stocks did? For a couple of reasons. First, while the administration has said it was close to making some trade deals, which could result in tariffs being reduced, the negotiations with China are likely to be protracted. If higher tariffs remain on China, that could hurt demand in the country, which is still the second-largest oil consumer in the world behind the U.S. So, even if trade deals with allies are made, a long and protracted trade war with China could still depress oil demand.