Wednesday was a big day for oil prices, and ASX oil shares made the most of it.
The S&P/ASX 200 Energy Index (ASX: XEJ) led the market today, gaining a whopping 4.88%, with oil producers making up the sector's leaders.
For context, the S&P/ASX 200 Index (ASX: XJO) closed 0.28% higher while the All Ordinaries Index (ASX: XAO) also ended the day with a 0.28% gain.
Let's take a closer look at what boosted oil prices on Wednesday.
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What drove oil prices, and ASX oil shares, higher today?
The price of oil soared to seven year highs on Wednesday – trading well over US$100 per barrel.
The rapid increase came after the International Energy Agency announced it will release 60 million barrels of oil from emergency reserves to calm supply concerns following Russia's invasion of Ukraine.
However, the size of the release – less than a single day's worth of global consumption – seems to have fuelled fears of a shortfall.
The Brent crude oil futures rose 5.8% to a high of US$111.09 per barrel on Wednesday, according to data from CNBC.
Meanwhile, West Texas Intermediate futures rose to US$109.30 per barrel at its intraday high – representing a 5.6% increase.
ASX oil giants Santos Ltd (ASX: STO), Woodside Petroleum Limited (ASX: WPL), and Beach Energy Ltd (ASX: BPT) all saw their share prices take off, along with the commodity's value.
Santos was the ASX 200 Energy Index's best performer on Wednesday. Its share price gained 6.2% to close at $7.71.
Meanwhile, the share prices of Woodside and Beach Energy gained 6.14% and 4.22% respectively.
Woodside was among several energy stocks to hit a new 52-week high on Wednesday.
Broker predicts a bright future for these energy producers
Likely also boosting shares in Santos and Woodside was a note out of Credit Suisse.
The broker believes the conflict in Ukraine – and the resulting decision among international energy giants to pull out of projects in Russia – could spell great news for the companies.
Credit Suisse analyst Saul Kavonic was quoted by The Australian as saying:
[The conflict] could present material upside to LNG supply/demand fundamentals benefiting Woodside and Santos, both in terms of pricing, asset selldowns and appetite to develop new growth projects.
With only Qatari and the US presenting material supply growth options on the table near-term, we expect more capacity may need to be incentivised elsewhere.
More marginal LNG projects may even return again, such as Browse, Sunrise, and the Darwin LNG expansion.
