Why did the Santos (ASX:STO) share price have such a great month in September?

As the world reopens, energy prices are rocketing.

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The Santos Ltd (ASX: STO) share price was a standout performer in September, gaining 18.5% over the month.

To put that in better perspective, the S&P/ASX 200 Index (ASX: XJO) lost 2.7% in September.

So, what's driving the Santos share price sharply higher?

Energy prices at 7-year highs

If your bottom line rests on oil and gas prices, then naturally you expect to be rewarded when those prices lift off.

And indeed, rewards are what Santos' shareholders experienced in September, as the Santos share price soared from $6.05 at the close of August to $7.17 per share at the close of last month.

Part of what's driving shares higher is the surging crude oil price. Brent crude leapt from an already high US$71.59 per barrel on 1 September to end the month at US$78.52 per barrel, a 9.6% increase.

And it's kept on going from there. Brent crude is currently trading at US$81.26 per barrel, its highest price in 7 years.

This comes as natural gas shortages are driving increased demand for crude oil. According to energy giant Saudi Aramco, "the global natural-gas shortage has boosted crude consumption by 500,000 barrels a day," Bloomberg reports.

Crude supplies have also been disrupted by the hurricane in the oil rich Gulf of Mexico, and continuing issues with producing during the pandemic.

And yesterday's decision (overnight Aussie time) by OPEC to stick with its gradual production increases, boosting supply by 400,000 barrels per day commencing in November, looks to be adding more upward pressure to prices as it fell short of consensus forecasts.

According to Rob Thummel, a portfolio manager at energy focused Tortoise, "The consensus was that it was going to be an 800,000 barrel-a-day temporary boost in November."

While spiking crude costs may not help fuel the global recovery, it's certainly been beneficial to the Santos share price.

Santos share price snapshot

The Santos share price has gained 45% over the past 12 months, compared to a gain of 23% on the ASX 200.

Year-to-date Santos shares are up 10%.

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 Bruce Jackson.

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