The oil price just hit a 13-year high, and these ASX 200 shares are surging

These ASX 200 shares are surging after the oil price jumped higher.

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Key points

  • Oil prices are rising, which is sending some ASX 200 shares higher
  • The share prices of Woodside, Santos and Beach have all jumped higher
  • Russia’s invasion of Ukraine is being blamed for the rise of oil prices

A message from our CIO, Scott Phillips:

“G’day Fools. If you’re like us, you’re dismayed by the events taking place in Ukraine. It is an unnecessary humanitarian tragedy. Times like these remind us that money is important, but other things are far more valuable. And yet the financial markets remain open, shares are trading, and our readers and members are looking to us for guidance. So we’ll do our best to continue to serve you, while also hoping for a swift and peaceful end to the war in Ukraine.”

A few S&P/ASX 200 Index (ASX: XJO) shares are soaring as the oil price just hit a 13-year high.

The brent crude oil price went to almost US$140 as the ongoing Russian invasion of Ukraine continues, with impacts flowing onto various markets such as oil.

These are some of the ASX 200 shares that are seeing big rises today:

The Woodside Petroleum Limited (ASX: WPL) share price is up 8%.

The Santos Ltd (ASX: STO) share price is up 5.1%.

A slightly smaller reaction is from the Beach Energy Ltd (ASX: BPT) share price, which has gone up more than 3%.

What’s going on with the brent crude oil price?

Oil prices have surged in recent weeks amid geopolitical events, as the West seeks to punish Russia for its invasion.

According to reporting by various media, including the Australian Financial Review, the US and others are now considering putting an embargo on Russian oil supplies. The global oil market is an example of the law of supply and demand.

The West wants to isolate Russia and do what it can to halt the attacks and bombardment of Ukraine’s cities.

Russia is one of the world’s largest suppliers of oil to the world, so an embargo could have a material impact.

Other countries are also adding to the pressure pushing up oil prices. For example, according to reporting by the AFR and Bloomberg, Saudi Arabia has increased the price of its main crude blends, whilst Libya’s production is dropping because of a “political crisis”. Saudi Arabia has increased the price of the Arab Light crude oil to US$4.95 more than the benchmark it uses.

The International Monetary Fund has said that the situation could have a very serious impact on the global economy.

Why does a higher oil price matter for these ASX 200 shares?

Woodside, Santos and Beach are all oil producers.

If the price of a commodity goes up then it can lead to higher profits for them. The cost of extracting a resource doesn’t really change when the resource price changes, so a higher oil price can largely add to bigger profits – apart from paying more tax to the government.

Investors often like to value businesses based on the expected profit potential.

However, the Qantas Airways Limited (ASX: QAN) share price is down close to 7%.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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 Bruce Jackson.

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