U.S. energy stocks have trailed behind the broader market this year. Still, President Donald Trump's $750 billion trade agreement with the European Union may be the catalyst to reverse that underperformance.
- CVX stock is up 8% in July. See the chart here.
While headlines fixated on the 15% tariff rate the U.S. will apply to European imports, a far more consequential detail went largely overlooked: the EU has agreed to purchase $750 billion worth of U.S. energy exports over the next three years, a sharp increase from the roughly $100 billion imported annually today.
Market Reaction: Energy Stocks Catch A Bid
The U.S. energy sector welcomed the move. The Energy Select Sector SPDR Fund XLE climbed 1% on Monday, outperforming all other sectors.
The agreement is being viewed as a potential structural shift in demand—one that could unlock long-term export growth, solidify pricing power, and revive capital flows into the sector.
Yet energy stocks still lag in 2025, with the XLE up just 1.9% year-to-date, compared to the SPDR S&P 500 ETF Trust SPY, which has gained 8.9%.
Among notable Monday’s movers in oil & gas stocks:
- Devon Energy Corp. DVN up 3.14%
- Diamondback Energy Inc. FANG up 3.03%
- APA Corp. APA up 2.64%
- EOG Resources Inc. EOG up 2.54%
- ConocoPhillips COP up 2.32%
- Cheniere Energy Inc. LNG, a major LNG exporter, jumped 3.3%
Bold Target, But Risks Remain
Oxford Economics' Oliver Rakau called the agreement a "clear political win for the U.S.," citing no signs of EU retaliation and a favorable tariff structure. Still, he flagged "significant implementation risks," related to the energy pledge, noting the target may prove too ambitious.
"The $750 billion pledge over three years is highly ambitious given current levels are under $100 billion," Rakau said.
Florence Schmit, energy strategist at Rabobank, echoed the skepticism.
"To hit $250 billion annually, the EU would need to import 67% of its energy needs from the U.S.," he said, citing Eurostat data.
Instead, she expects the deal will trigger European investment in U.S. LNG infrastructure, securing future supply but having a limited short-term impact on global balances.
According to Oilprice.com, the deal aims to replace sanctioned Russian gas volumes with U.S. LNG through a combination of spot and long-term contracts. Although no specific contracts were announced, follow-on agreements are expected to be announced in the coming weeks.
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