Oil surges 10% overnight. Here are 2 ASX 200 stocks to watch today

Oil prices have surged overnight as the ongoing war in the Middle East continues to raise concerns about the global energy supply.

According to Trading Economics, West Texas Intermediate (WTI) crude jumped more than 10% to US$96 per barrel, while Brent crude climbed to US$101 per barrel.

The sharp move higher could set the stage for another strong session for Australian energy producers when the market opens.

Two ASX 200 companies that may attract attention today are Woodside Energy Group Ltd (ASX: WDS) and Santos Ltd (ASX: STO). Both stocks have already been rallying in recent weeks.

Oil rally driven by supply fears

The surge in oil prices comes as geopolitical risks in the Middle East intensify.

Markets are focused on potential disruptions around the Strait of Hormuz, one of the world’s most important energy transit routes.

According to the US Energy Information Administration, around 20 million barrels of oil and petroleum products pass through the Strait of Hormuz each day. This is equivalent to roughly 20% of global oil consumption.

The route is also critical for gas markets. Estimates indicate around 20% of global liquefied natural gas (LNG) trade moves through the strait, with much of it exported from Qatar to Asian markets.

Analysts warn that if the strait is significantly disrupted, millions of barrels of daily oil supply will be affected. Some forecasts suggest crude prices could climb toward US$120 per barrel or higher if exports from the Persian Gulf are halted.

Woodside shares already climbing

The oil rally has already been supporting the share price of Woodside.

Shares in Woodside recently closed at $31.05, giving the company a market capitalisation of about $59 billion.

Over the past month, the Woodside share price has climbed around 18%, as stronger oil prices improved investor sentiment toward energy producers.

Woodside is Australia’s largest independent oil and gas company and generates significant revenue from LNG and crude production.

If the surge in crude continues, investors may expect further strength in the Woodside share price when trading begins.

Santos shares also gaining momentum

Shares in Santos have also been trending higher.

The Santos share price recently finished at $7.49, giving the company a market capitalisation of roughly $24 billion.

The stock has risen around 10% over the past month, supported by the rebound in global oil markets.

Foolish takeaway

The key question for energy investors is whether oil prices can keep rising.

With WTI crude trading US$96 per barrel, markets will be watching closely to see if prices push back above the US$100 level.

If geopolitical tensions remain elevated and supply risks continue, Woodside and Santos will likely remain in focus on the ASX today.

The post Oil surges 10% overnight. Here are 2 ASX 200 stocks to watch today appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• $10,000 invested in Droneshield and Woodside shares just 1 week ago is now worth…
• Why are Ampol, Beach Energy shares jumping higher again today?
• Why Collins Foods, St George Mining, Whitehaven Coal, and Woodside shares are pushing higher today
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Aaron Teboneras 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.