The Woodside Petroleum Limited (ASX: WPL) share price is a top performer on Tuesday, rallying 4.5% to a 2-month high of $23.91.
Oil markets continued to gather momentum overnight, with Brent crude oil adding 1.73% to US$79.4/b and crude oil rallying 1.9% to US$75.2/b.
Why oil prices are surging
The bullish performance of oil has been supported by recent supply disruptions caused by Hurricane Ida.
According to a recent report from the Bureau of Safety and Environmental Enforcement, 16.18% of oil production in the Gulf of Mexico remains halted.
In addition to supply pressures, oil demand is expected to return to pre-COVID-19 levels in 2022, according to OPEC's recent monthly report.
The bullish narrative for oil doesn't stop there.
At the S&P Global Platts Asia Pacific Petroleum Conference on 27 September, industry participants said that:
… a sharp decline in upstream investments and OPEC's cautious approach in lifting the group's production volumes could lead to an undersupplied market next year, with Asian end-users and consumers mostly finding crude and commodities prices overheated.
Further, US oil producer Hess Corporation's president and chief operating officer Greg Hill said:
Global upstream investment before the COVID-19 pandemic was around $650 billion, but it has tumbled to around $300 billion, a decline of around 50%.
Analysts at S&P Global Platts Analytics forecast demand in India and South Korea to rise above their respective 2019 levels next year. This is in addition to China which is forecast to increase regional demand above pre-COVID levels by around 3%.
What this means for the Woodside share price
As with any commodity-related company, the Woodside share price lives and dies by the price of oil.
The recent bullish performance and outlook for oil has helped drive a V-shaped performance for Woodside shares.
At the beginning of September, the Woodside share price was down around 16% year-to-date.
Its shares are now sitting 4.4% higher year-to-date.
