The Woodside Energy Group Ltd (ASX: WDS) share price is outperforming the S&P/ASX 200 Index (ASX: XJO) today.
Shares in the ASX 200 energy stock closed yesterday trading for $25.42. In early afternoon trade on Tuesday, shares are swapping hands for $25.54 apiece, up 0.5%.
By comparison, the ASX 200 is up 0.1% at this same time.
It's not just the Woodside share price that's running ahead of the benchmark index today.
Santos Ltd (ASX: STO) shares are up 0.9% at $7.69 at the time of writing. And the Beach Energy Ltd (ASX: BPT) share price is up 3.6% at $1.29 a share.
As for the broader energy sector, the S&P/ASX 200 Energy Index (ASX: XEJ) is up 0.5%.
Here's what's happening.
Image source: Getty Images
Woodside share price lifts on rising conflict fears
The Woodside share price, along with Santos and Beach Energy, is catching tailwinds today from a rising oil price and fears of a looming gas shortage in Europe.
On the oil price front, Brent crude oil has gained more than 7% over the past week, currently trading at US$81.84 per barrel. (Up from US$76.48 per barrel a week ago.)
Despite expectations of lower than previously forecast demand growth in 2025, traders have been sending the oil price sharply higher as fears of an imminent, large-scale Iranian reprisal attack on Israel grow.
That's seen the United States increase its military capabilities in the Middle East in preparation to defend Israel, which could potentially result in open conflict between the US and Iran.
With that highly undesirable possibility in mind, the oil price – and, by connection, the Woodside share price – could run considerably higher from today's levels.
Commenting on the outlook for Brent crude oil, Dan Ghali, a commodity strategist at TD Securities said (courtesy of Bloomberg), "Algorithmic trend followers still hold dry powder in Brent crude, suggesting aggressions from Iranian soil could still spark additional buying activity from this cohort."
Unfortunately, it's not just the Middle East where tensions could ratchet higher and impact the Woodside share price.
In Europe, Russia's invasion of Ukraine has taken a new twist, with Ukraine recently pressing into Russia's own Kursk region.
Amid fierce fighting, investors are concerned about a crucial gas connection in the region that still pumps some Russian gas to European nations. Despite major reductions in Russian gas imports since the outbreak of the war, analysts caution that if the supply lines are cut, gas prices would likely spike higher.
According to Arne Lohmann Rasmussen, chief analyst at Global Risk Management (quoted by The Australian Financial Review):
As we get close to December 31 and if no solution to replace the Russian gas has been found, I would expect the market to get nervous. Even if the parties still relying on that supply moved to secure alternative deliveries, that would still mean less gas in the global system.
With energy prices coming in at the low end of most analysts' forecasts so far in 2024, the Woodside share price has been struggling, down almost 19% year to date.
