Why Woodside shares could face short-term pressure as oil prices slide

The Woodside Energy Group Ltd (ASX: WDS) share price could come under pressure in the near term. This comes as global oil prices weaken amid fresh geopolitical developments.

At last week’s market close, the company’s shares finished at $23.66.

Woodside is Australia’s largest oil and gas producer, so changes in oil prices directly affect earnings and investor sentiment.

Right now, the outlook for oil prices is turning softer, which could weigh on the share price.

Here’s why.

Oil prices are already under pressure

Oil prices have been trending lower in recent months, and the weakness has continued into early 2026.

According to Trading Economics, WTI crude is trading around US$57.30 a barrel. That is down roughly 22.5% over the past year.

Brent crude, the global benchmark, is sitting near US$60.75 a barrel. That puts Brent down around 20.6% year-on-year.

The weakness is being driven by slower global economic growth, high inventory levels, and rising production from non-OPEC countries. Supply growth has continued even as demand growth cools, particularly from China.

The International Energy Agency expects the global oil market to run a surplus of about 3.8 million barrels per day in 2026. That surplus is limiting the impact of geopolitical risks and keeping prices under pressure.

The US action in Venezuela adds more supply risk

Recent events in Venezuela could also make the oil oversupply problem worse.

The United States has taken direct control following the removal of Venezuela’s president. US leadership has signalled it plans to stabilise and manage the country during a transition period.

Importantly for markets, the US has also made clear it wants to bring Venezuela’s oil industry back online.

Venezuela holds the largest proven oil reserves in the world. However, years of sanctions, underinvestment, and poor management have crushed production.

If US companies are allowed to step in, as President Trump has indicated, production could rise over time.

Even the possibility of more Venezuelan oil returning to global markets puts pressure on prices today.

Why this matters for Woodside

Woodside’s earnings are closely linked to oil prices, particularly for its oil-heavy assets.

Lower oil prices generally mean:

• Lower revenue

• Weaker cash flow

• Less room for dividend growth

• Softer investor confidence

Even if Woodside’s production remains strong, falling oil prices can still hurt profitability.

In the current environment, investors may want to become more cautious on oil-exposed stocks, including Woodside.

Foolish bottom line

Woodside is a quality energy business, but oil markets move in cycles.

With oil prices under pressure and the risk of more global supply emerging, Woodside shares may face short-term downside. Investors should keep a close eye on oil prices and be prepared for volatility before conditions improve.

The post Why Woodside shares could face short-term pressure as oil prices slide appeared first on The Motley Fool Australia.

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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.