This ASX 200 energy stock just jumped 13%. Here’s why

It’s been a rough start to the week’s trading thus far for the S&P/ASX 200 Index (ASX: XJO) and many ASX 200 shares this Monday. At the time of writing, the ASX 200 has dropped by 0.45%, dragging the index back under 9,160 points. It’s a stark contrast to last week’s string of new record highs. But let’s talk about one ASX 200 energy stock that is going the other way.

That ASX 200 energy stock is Karoon Energy Ltd (ASX: KAR). Karoon, an ASX oil and gas stock, is currently the best-performing share on the entire ASX 200 index. Karoon shares closed at $1.54 each last week. But this morning, those same shares opened at $1.80 and are currently up a hefty 13.1% at $1.75 each.

So what’s going on here?

Well, we know it’s not the earnings report that Karoon delivered last week. As we covered at the time, this report was not well-received by investors. Karoon shares tanked 3% on Thursday when the report was released, and dropped another 2.5% on Friday.

There’s another reason why Karoon shares are making up all of that ground and more this Monday.

Why are ASX 200 energy stocks like Karoon rocketing today?

As you’re probably aware of by now, the United States and Israel launched a dramatic full-scale attack on Iran over the weekend. This has resulted in a massive spike in the price of oil over the last 24 hours.

According to Trading Economics, West Texas Intermediate (WTI) crude futures jumped more than 10% this morning to over US$75 a barrel (an eight-month high) before dipping back down to about US$70 a barrel soon after. Brent crude followed a similar pattern. It rocketed up 12% to over US$80 a barrel at one point before easing to around US$75 a barrel at the time of writing.

Iran is a major oil producer in the Middle East. But a potential disruption of Iranian oil would not impact global supplies, given that the country was already under steep economic sanctions. What would impact supplies is the closure of the Straight of Hormuz. This, according to many reports, is already underway.

This geopolitically-significant Strait is located directly on Iran’s southern coast, and is a narrow chokepoint that facilitates the passage of around 20% of the world’s oil supply. Iran has long threatened to close this Straight if threatened, and, according to the BBC, seems to be attempting to do so right now. The report alleges that “at least three” oil takers have been attacked by the country’s armed forces in recent hours.

Whilst painful for much of the world’s economy, such a scenario would arguably benefit Karoon and other ASX 200 energy stocks. That seems to be what the market is anticipating today, anyway, judging by what has happened to the Karoon share price. As well as other ASX 200 energy stocks. This will be an illuminating corner of the markets to watch this week.

The post This ASX 200 energy stock just jumped 13%. Here’s why appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.