HK Stock Market Move | Oil and gas stocks generally fell in early trading, with Trump expressing optimism about reaching an agreement with Iran, while international oil prices saw a sharp decline.

Oil and gas stocks fell across the board in early trading. As of the time of writing, Shandong Molong Petroleum Machinery (00568) fell 5.93% to 7.61 Hong Kong dollars; PETRO-KING (02178) fell 5.37% to 0.194 Hong Kong dollars; CHINA OILFIELD (02883) fell 4.46% to 8.79 Hong Kong dollars; SINOPEC SSC (01033) fell 2.6% to 0.75 Hong Kong dollars. On the news front, according to media reports on May 6th, two U.S. officials and two other sources revealed that the White House believes it is close to reaching a memorandum of understanding with Iran. The memorandum aims to end the war and set a framework for more detailed nuclear negotiations. As expectations for easing tensions in the Middle East rise, international oil prices fell sharply as of May 6th. Goldman Sachs had previously stated that the rate at which global oil inventories are decreasing is accelerating, and low inventories have become an important factor affecting oil prices amid supply constraints. It is generally believed that if an agreement can be reached between the parties, it will help restore normal shipping in the Strait of Hormuz. The Strait of Hormuz handles about 20% of global seaborne crude oil transportation, and once shipping risks decrease, global energy supply chain pressure will be significantly eased, directly weakening the recent geopolitical risk premium that has pushed oil prices up.