Santos and Woodside fall after oil prices crash

What's going on in the energy sector on Tuesday? Let's find out.

| More on:
sad looking petroleum worker standing next to oil drill

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

It has been a tough start to the day for ASX 200 energy shares such as Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS).

The energy sector is a sea of red on Tuesday after oil prices crashed overnight.

What happened to oil prices?

Both Brent crude oil and WTI crude oil dropped as much as 6% during Monday night's session. In fact, this was the biggest decline recorded by US crude oil in more than two years.

According to CNBC, U.S. WTI futures dropped 6.1% to close at US$67.38 per barrel for its biggest daily loss since 12 July 2022, when the benchmark lost 7.9%. Whereas futures for global crude benchmark Brent slid 6.1% to settle at US$71.42 per barrel.

The catalyst for this was Israel's decision to steer clear of oil, nuclear, and civilian infrastructure locations when striking Iran. This was confirmed by Iranian oil news network Shana, which said that Iran's oil industry operation is operating as normal with no disruptions. This is good news given that Iran is estimated to account for upwards of 4% of global oil supplies.

It seems that the market had priced in a risk premium into oil prices in recent weeks and this has now quickly unravelled.

Andy Lipow from Lipow Oil Associates isn't expecting a swift recovery from oil prices. He told CNBC:

With Israel deliberately, and perhaps with some American encouragement, avoiding the targeting of crude oil facilities, the oil market is back to looking at an oversupplied market.

Oil prices will remain under pressure for the rest of this year, it may be difficult to see Brent crude oil prices reaching $80 in the foreseeable future.

Though, Bob McNally, from Rapidan Energy doesn't believe that oil markets are out of the woods just yet. He said:

Direct Israel-Iran conflict will likely persist. Israel signaled it is able and willing to target energy and nuclear targets in future strikes.

Should you buy the dip?

A number of brokers see a lot of value in both Santos and Woodside shares at current levels.

For example, the team at Morgans has an add rating and $33.00 price target on Woodside's shares, whereas Ord Minnett has a buy rating and $8.50 price target on Santos' shares.

This could make both energy shares worth considering. Though, investors should be aware that volatile oil prices mean they are higher risk options.

Should you invest $1,000 in Xero Limited right now?

Before you buy Xero Limited shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Xero Limited wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 6 March 2025

Motley Fool contributor James Mickleboro has positions in Woodside Energy Group. 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.

More on Energy Shares

Man with a hand on his head looks at a red stock market chart showing a falling share price.
Energy Shares

Why is this ASX coal share crashing 13% on Thursday?

It's a poor day on the market for many ASX coal shares today.

Read more »

A miner in visibility gear and hard hat looks seriously at an iPad device in a field where oil mining equipment is visible in the background.
Energy Shares

How low can the oil price go? Here's Citi's 2025 forecast

Here’s what Citi says investors can expect from the oil price in the year ahead.

Read more »

Miner looking at a tablet.
Energy Shares

ASX 200 uranium share lights up on Queensland acquisition

The ASX 200 uranium producer is increasing its Queensland assets.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Energy Shares

Guess which ASX uranium stock is racing higher on huge news

Let's find out what this uranium developer has announced on Wednesday.

Read more »

A kid stretches up to reach the top of the ruler drawn on the wall behind.
Energy Shares

This ASX 200 share is down 40% in 2 months, an expert says it has significant potential

This fund manager has outlined why this stock has a positive future.

Read more »

oil and gas worker checks phone on site in front of oil and gas equipment
Energy Shares

Why ASX 200 energy shares are facing a plunging oil price in 2025

Just how low will the oil price go in 2025? Let’s find out.

Read more »

Man with a hand on his head looks at a red stock market chart showing a falling share price.
Share Market News

Why did the ASX 200 hit a six-month low last week?

There was turmoil on the share market with ASX 200 energy stocks the worst affected.

Read more »

Woman refuelling the gas tank at fuel pump, symbolising the Ampol share price.
Energy Shares

This ASX 200 share just hit a 52-week low, one expert thinks it's a great buy

UBS believes this stock could significantly drive returns.

Read more »