Oil and Defense Stocks Move; Newmont Jumps; US Steel Concerns
Jun 13, 2025
Geopolitical tensions are shaking up the stock market, particularly boosting defense and energy sectors. Raytheon and Chevron are seeing gains as fears of a wider conflict with Iran push oil prices skyward. Gold also benefits from the situation, with Newmont Corp. on the rise as predictions suggest it could reach over $3,600 an ounce. Meanwhile, concerns loom for US Steel amid troubling reports, reflecting the unpredictable nature of market movements influenced by global events.
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Geopolitical Impact on Oil and Defense
Geopolitical tensions between Israel and Iran caused a surge in defense and oil stocks. - Oil prices jumped over 13%, benefiting American and international energy companies alike.
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Low Geopolitical Risk Premium Helps US Oil
The geopolitical risk premium between Brent and NYMEX oil is very low right now. - This favors American oil producers and boosts local U.S. energy stocks alongside international giants.
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Gold Rises with Increased Risk Premium
Gold prices and gold miners like Newmont rose due to increased risk premium from Israel's attack on Iran. - Despite gold being overvalued by some measures, it remains a key lead indicator in financial markets.
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- Raytheon (RTX) is higher this morning along with other defense stocks on the S&P as geopolitical tensions rise over Israel's strikes on Iran. It launched airstrikes against Iran’s nuclear program and ballistic-missile sites renewed a standoff between two adversaries that risks spiraling into a wider conflict. While the reaction was strongest in crude oil, other pockets of the market suggested that investors are watching how long the tensions will last and whether the situation escalates.
- Chevron (CVX) shares are higher this morning as Israel strikes Iran. Oil prices surged double digits after Israel carried out strikes against Iran, raising fears of a wider war in the region. The Strait of Hormuz, a critical oil chokepoint, is a key concern, with the potential for Tehran to retaliate and block the strait, and OPEC+ spare capacity potentially being challenged in such a scenario.
- Newmont Corp. (NEM) shares are higher this morning as gold's risk premium is lifted by Israel's attack on Iran. According to Bloomberg Intelligence, Israel's attack on Iran could trigger a further jump in gold's risk premium above fair value of $100-$150 an ounce, pushing the metal beyond $3,600. Gold is expensive vs. almost every other financial yardstick and appears overvalued by $200-$700 an ounce vs. our three regression models, yet it's likely to remain a lead indicator.
- US Steel (X) shares are lower in premarket trading after Nikkei reported that Nippon Steel’s planned takeover of the US company may not proceed if the Japanese company has insufficient freedom of management. Nippon Steel continues to seek condition that US steel becomes wholly owned, Nikkei reported citing an unidentified executive
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