Despite the Delta strain giving the COVID-19 pandemic a second wind, the value of one commodity is expected to skyrocket.
Research firm IBISWorld reported this week that it expects the global price for crude oil to rise a whopping 42.9% this year.
Oil prices plummeted in 2020 after the coronavirus spread around the world, suppressing long distance travel as well as daily commuting.
“Oil prices remain volatile, with demand conditions still depressed due to the ongoing pandemic,” said IBISWorld senior industry analyst James Thomson.
“However, recovering demand conditions and OPEC’s willingness to limit supply will likely support prices in the short term.”
For Australian oil producers, declining domestic demand will force them to turn to overseas markets over the coming 5 years, according to IBISWorld.
“Exports are projected to account for over 90% of Australian production volume in 2021-22, up from around 80% five years ago. The Office of the Chief Economist expects Australia’s oil exports to grow by over 40% in 2021-22, to $10.9 billion.”
Which ASX 200 shares can benefit from the oil price boost?
Some of the S&P/ASX 200 Index (ASX: XJO) companies that could take advantage of the 43% boost in crude oil prices are:
- Santos Ltd (ASX: STO)
- Oil Search Ltd (ASX: OSH)
- Woodside Petroleum Limited (ASX: WPL)
- Ampol Ltd (ASX: ALD)
- Beach Energy Ltd (ASX: BPT)
Oil Search and Santos are in a complicated dance at the moment with the latter trying to acquire the former. Both ASX shares are falling while the Papua New Guinea government might even have a say in the proposal.
Santos fell 1.24% on Thursday and Oil Search dipped 1.51%. Both stocks have gone sideways this year.
Woodside shares have fallen more than 5.9% this year. But The Motley Fool has previously reported that its dividends might be the best in the energy sector.
Ampol is slightly different to the other companies as it also runs a retail network for its petroleum as well. A couple of weeks ago, Macquarie Group Ltd (ASX: MQG) rated it as a ‘buy’ for the potential of a capital return during the August reporting season.
Beach Energy has had an unhappy year, with its shares losing almost 35% in value. The Motley Fool reported that it is actually the worst-performing ASX energy stock so far in 2021. Disappointing third quarter results revealed in late April seems to have been the catalyst. Beach Energy shares lost an eye-watering 22% that fateful day.