Energy stocks were declining Tuesday afternoon, with the NYSE Energy Sector Index falling 2.6% and the Energy Select Sector SPDR Fund (XLE) dropping 2.5%.

The Philadelphia Oil Service Sector index was posting a 2.7% decline, while the Dow Jones US Utilities index was rising 1.1%.

The Washington Post reported Tuesday that Israel's Prime Minister Benjamin Netanyahu told the Biden Administration Israel will concentrate on attacking Iranian military facilities when it responds, easing concerns the strike could impact Iran's 1.7 million barrels per day of oil exports and likely draw Iran into a wider Middle Eastern war.

The International Energy Agency again cut its estimate for 2024 demand growth in its October Oil Market Report, seeing demand at 862,000 barrels per day over 2023 levels, down from its 903,000 bpd September estimate. The agency slightly raised its 2025 demand growth estimate to 1 million bpd while warning that rising non-OPEC supply and weak Chinese demand will result in higher inventories next year.

Front-month West Texas Intermediate crude oil slumped 4.7% to $70.37 a barrel while the global benchmark Brent crude contract fell 4.4% to $74.04 a barrel. Henry Hub natural gas futures rose 0.8% to $2.51 per 1 million BTU.

In corporate news, Phillips 66 (PSX) said late Monday it agreed to sell its 49% stake in Coop Mineraloel to its Swiss joint venture partner for $1.24 billion, as part of the petroleum refiner's ongoing divestiture efforts. Phillips 66 shares fell 2%.

WhiteHawk Energy reiterated its bid to buy PHX Minerals (PHX) at $4 a share, reflecting a 19% premium to PHX's 90-day volume weighted average price as of Friday. PHX shares jumped 5%.

Shell (SHEL) is being asked to pay at least 1 billion euros ($1.09 billion) in damages by the Russian General Prosecutor's office, the RIA news agency reported Tuesday, citing the Moscow Arbitration court. Shell was down 3.2%.