Santos Ltd (ASX: STO) shareholders have held on through some good big price swings this year.
Just this week Santos shares lost 4.1% on Tuesday only to regain 1.2% on Wednesday.
In early morning trade, Santos is up 1.6%.
And we're not talking about a small-cap explorer here. The S&P/ASX 200 Index (ASX: XJO) energy giant has a market cap north of $25 billion.
So, what's going on?
Santos shares leap as crude oil prices rocket overnight
The global energy market was already tight heading into 2022. That was largely due to limited new expenditures in exploration and increased production coming just as the world reopened from pandemic closures.
Then oil-rich Russia's invasion of Ukraine lit a fire under global energy costs, sending Santos' shares rocketing.
Last week, on 9 March, Brent crude oil prices notched up to 14-year highs, trading at US$128 per barrel.
Since then, oil has largely trended lower amid hopes that Ukraine may strike a peace deal with Russia by pledging neutrality. That saw Brent trading for US$98 per barrel just yesterday. It also saw Santos shares drop 9.4% from their 7 March 1-year highs.
Yesterday (overnight Aussie time) those peace hopes were dimmed following word from Russian authorities that only limited progress has been made in those peace talks.
In response, traders sent Brent crude oil prices leaping 8.8%. Brent is currently worth just under $107 per barrel.
So how will Santos shares be impacted by crude prices moving forward?
An expert opinion
Morgan Stanley analysts Martijn Rats and Amy Sergeant don't forecast an end to the recent volatility any time soon.
The analysts, as reported by Bloomberg, also lifted their Q3 forecast for Brent prices by US$20, bring it to US$120 per barrel. A price that's likely to benefit Santos shares.
According to Rats and Sergeant:
To say that oil prices have been volatile recently would be an understatement. It will likely become progressively more difficult for Russia to maintain its seaborne exports in the coming months.
The overnight moves for Brent crude marked the 16th consecutive day the international benchmark swung by more than $5 in intraday trading, setting a new record.
How have Santos shares been tracking?
Santos shares have gained 12% so far in 2022, compared to a loss of 4% posted by the ASX 200.
Santos shares also pay a 2.7% trailing dividend yield, 70% franked.
