The Santos Ltd (ASX: STO) share price descended today in line with a drop in the broader energy index.
Santos shares fell by 2.44% to close at $7.59. For perspective, the S&P/ASX 200 Energy Index (ASX: XEJ) tumbled 2.48%.
Let's take a look at what might have impacted Santos today.
Oil prices
The fall in the Santos share price followed a plunge in oil prices in overseas markets on Wednesday. This came after the United Arab Emirates expressed support for increasing production, the BBC reported.
Brent crude dropped 13.2% to $111.14 a barrel, the biggest fall since 21 April 2020. This followed weeks of soaring prices as a result of supply disruptions due to Russia's invasion of Ukraine. However, Brent crude is now recovering and is up 3.5% to $115.03 per barrel, Bloomberg figures reveal.
The Woodside Petroleum Limited (ASX: WPL) share price also closed down 4.67% today.
Santos CEO shares views on energy market
Santos CEO Kevin Gallagher expressed concerns about energy prices in the future. Speaking at the Financial Review Business Summit, he said:
Unless there's a change in government policies globally – particularly if we go down the route of sanctions on Russian oil – I just don't see how the supply side can fill the gap in a meaningful time frame to address these high prices.
That feels to me like unless there's another massive slowdown as a consequence of a massive recession or another pandemic we could be stuck with very high prices, unhealthily high prices, for some period of time.
Further commenting on the energy outlook, Gallagher warned pulling the plug on fossil fuels "is not going to speed up the transition" (to clean energy) and could smash the manufacturing industry. He said:
That wouldn't be so much of a transition but a demolition of that sector. There's got to be multiple decades to transition.
Analysts at Morgans have recently placed a $9 price target on Santos shares. That's 18% more than the current Santos share price. The broker likes Santos due to its diversified earnings base and growth profile.
As my Foolish colleague Brooke reported, Firetrail Investments portfolio manager Blake Henricks also recently recommended buying Santos shares. He said the company was "inflation-protected" with huge cash flows.
Santos share price snapshot
The Santos share price has climbed 7% over the past year. In 2022, it is up 21%. In the past month, Santos shares have gained almost 2%, while they have dropped 1% in a week.
Santos has a market capitalisation of about $25.8 billion based on its current share price.
