Santos and Woodside shares surging higher on Monday as oil price in focus amid Iran strikes

Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) shares are charging higher today.

In early morning trade on Monday, Santos shares are up 7.8%, changing hands for $7.29 each.

And Woodside shares are coming in a close second, up 7.7% at $30.50 apiece.

For some context, the ASX 200 is down 0.5% at this same time.

Investors are bidding up the S&P/ASX 200 Index (ASX: XJO) energy stocks today following the United States and Israel’s attack on Iran.

The attack, which killed Iran’s autocratic leader Ali Khamenei along with many of his top officials, has seen Iran respond with missile attacks of its own; not just on Israel, but on many of its Arab neighbours as well.

And, for the moment, the conflict sees the Strait of Hormuz – a narrow shipping route responsible for the transit of some 20% of the world’s oil and gas supplies – shuttered.

At market close on Friday, Brent crude oil prices were up 3% on the prior day, trading for US$73 per barrel.

But investors piling into Santos and Woodside shares today could well see a much larger oil price spike when futures trading reopens later this morning in Australia (Sunday evening, US time).

Indeed, many analysts expect oil prices to leap another 10% to 15% as traders weigh the potential supply disruptions from the Middle East conflict.

Uncertainty reigns in global oil markets

As for what investors can expect from global energy prices next – and by connection Santos and Woodside shares – uncertainty is the name of the game for now.

“How this ends is extremely uncertain at this point,” Barclays analyst Amarpreet Singh said (quoted by Bloomberg). “But in the meantime, oil markets will have to face their worst fears.”

Rob Thummel, a portfolio manager at Tortoise Capital, added, “It’s just a matter of what impact will Iran’s response have on the global oil supply, at least temporarily, and then maybe longer term.”

Medium-term uncertainty aside, Jorge Leon, head of geopolitical analysis at consultant Rystad Energy, does forecast a material increase in oil prices this week.

According to Leon:

Iran has retaliated in a far more aggressive and expansive manner than in prior exchanges. Unless de-escalation signals emerge swiftly, we expect a significant upward repricing of oil at the start of the week.

Should de-escalation not eventuate, and should the Strait of Hormuz remain closed to tanker traffic (hampering any efforts by OPEC to increase supplies), Wood Mackenzie expects we’ll see oil prices top US$100 per barrel.

Wood Mackenzie senior vice president Alan Gelder said (quoted by The Australian Financial Review), “The most recent comparison is during the early days of the Russia-Ukraine conflict, when the fear of loss of Russian supplies drove the oil price to over US$125.”

How have Santos and Woodside shares been tracking?

With today’s big intraday gains factored in, Santos shares are up 9.5% since this time last year.

And Woodside shares have gained 20.8% over this same period.

Neither figure includes the dividends paid out by the ASX 200 energy giants over the past 12 months.

The post Santos and Woodside shares surging higher on Monday as oil price in focus amid Iran strikes appeared first on The Motley Fool Australia.

More reading

• Buy, hold, sell: CSL, TechnologyOne, and Woodside shares
• 5 things to watch on the ASX 200 on Monday
• Top brokers name 3 ASX shares to buy next week
• 7 ASX All Ords shares finish earnings season on a 52-week high
• 3 ASX dividend stocks I think every Aussie should own

Motley Fool contributor Bernd Struben 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.