Brent crude rose 3% to $96.16 a barrel on Monday as U.S.-Iran negotiations advanced, but stocks of U.K. energy firms like BP and Shell dipped. The decline reflected market caution after the U.S. conducted self-defense strikes in southern Iran, which could derail diplomatic progress. Oil prices had fallen earlier in the week amid optimism about a potential agreement to ease tensions. Harbour Energy plummeted 3.5%, signaling investor unease about geopolitical risks. Meanwhile, Tenaga Nasional, Malaysia’s state-owned utility, remained resilient due to its 1.4GW gas plant contract and fuel cost adjustments tied to its grid upgrades under the national energy transition plan. Shares fell 1.5% despite these fundamentals, suggesting short-term volatility overshadowed long-term prospects.

The U.S.-Iran deal discussions, initially tied to unfreezing Iranian assets, took a tactical turn with military actions in Iran. Though both sides claim progress, the strikes—reported by U.S. Central Command—undermined trust. Oil futures reflected this uncertainty: front-month WTI crude fell 5.3% to $91.50 as traders weighed potential conflict escalation. Analysts noted that a finalized memorandum of understanding could stabilize prices, but the lack of concrete timelines kept markets fragmented. Tenaga’s resilience contrasts with broader energy sector turbulence, as its fuel cost pass-through mechanism buffers against immediate price swings. However, prolonged instability could test its financial buffers.

Tenaga’s outlook hinges on executing its gas plant project and securing grid upgrades, which could drive earnings growth. Yet, the broader market’s focus on geopolitical risks highlights vulnerabilities in energy-dependent industries. Investors are balancing near-term volatility with long-term bets on energy transition policies. For Tenaga, the key question is whether its strategic assets can offset external shocks. Meanwhile, the U.S.-Iran standoff remains a wildcard, with oil prices acting as a barometer for diplomatic success or failure.