ASX 200 energy shares appear set to continue flying in 2023, as the world continues to adapt to a complete restructuring of global energy supply chains due to Russia's invasion of Ukraine.
In a show of unity against Russian aggression, many countries have sought alternative sources of energy so they can boycott Russian exports.
This has led to a surge in global commodity prices for coal, oil, and gas. The beneficiaries: ASX 200 energy shares.
During a shocker of a year for ASX 200 shares in general, energy shares shined megawatts in 2022.
The S&P/ASX 200 Energy (ASX: XEJ) rose by 40% while the S&P/ASX 200 Index (ASX: XJO) dipped 5.5%.
The top-performing ASX 200 energy shares of 2022 delivered unbelievable gains, led by Whitehaven Coal Ltd (ASX: WHC) with an extraordinary share price rise of 261%.
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So, what's ahead for ASX 200 energy shares in 2023?
The Federal Government forecasts continuing record earnings from resource and energy exports. This bodes well for ASX 200 energy shares.
The Office of the Chief Economist says resource and energy export earnings are tipped to set another new record at $459 billion for FY23.
Then, it predicts a drop back to $391 billion in FY24 — still the third-highest level of earnings on record.
According to a report published last month, lower demand due to a slowing global economy and eased supply disruptions will reduce commodity prices after FY24.
The report gave this overview:
Energy commodity prices have fallen from record highs … but will likely stay above prewar levels in 2023, as some Russian energy supply becomes stranded.
Australian thermal coal prices have declined from record levels, but remain high historically.
Metallurgical coal prices have steadied … Prices are likely to drift down over 2023, as supply recovers.
Oil prices have steadied below the US$90 a barrel mark, as weak demand more than offsets the impact of supply cuts.
[Spot LNG] prices are likely to stay well above pre-war levels, as some Russian gas output is stranded.
After 2023–24, earnings from [LNG and thermal coal] are likely to fall back towards pre-COVID-19 levels, as gains in world supply bring down prices.
What do the market experts think?
United States investment behemoth BlackRock Inc (NYSE: BLK) is backing global energy shares for the short and long term.
In the short term, ongoing supply constraints make them especially appealing. But in the long term, fossil fuels will also play a critical role in decarbonisation for some time yet.
In its 2023 outlook, BlackRock says:
Western sanctions have triggered a pursuit of economic selfsufficiency. Energy security is now a priority: As Europe weans itself off Russian oil and gas, we've seen energy shortages and higher prices.
In the U.S., we see a push to favor trading partners when sourcing the metals and materials needed in the net-zero transition.
Oil and gas will still be needed to meet future energy demand under any plausible transition.
If high-carbon production falls faster than low-carbon alternatives are phased in, shortages could result, driving up prices and disrupting economic activity.
Should you buy ASX 200 energy shares now?
As every investor knows, you've got to be careful when buying cyclical stocks like ASX 200 energy shares at a time of historically high share prices and commodity prices.
Some investors may see the justification for doing so. Continuing relatively high commodity prices — at least for now — is likely to mean greater dividend income for shareholders in FY23 and FY24.
Top ASX 200 energy shares like Woodside Energy Group Ltd (ASX: WDS) and Whitehaven Coal paid record dividends in FY22.
Continuing high commodity prices could make 2023 a huge year for passive income.
This could be important for many investors, with brokerage Investors Mutual saying dividends are now 'critical' because capital growth is likely to be lower for the next decade.
So, even at today's prices, ASX 200 energy shares might still be attractive to some investors on these grounds.
Which ASX 200 energy shares will pay the highest dividends?
Looking ahead to FY24, ASX 200 coal share New Hope Corporation Limited (ASX: NHC) is expected to pay the biggest dividend of the ASX 200 energy shares, as my Fool colleague James reports.
Consensus estimates are $1.30 per share, which equates to a 22% dividend yield.
Citi is expecting even bigger things. It reckons New Hope could end up paying $1.93 per share. That's a 32% yield — which equates to party time for shareholders.
Whitehaven coal is also expected to pay out big.
Consensus estimates of an FY24 dividend of 91 cents per share equate to a 10.5% dividend yield. Bell Potter reckons the dividend could go as high as $1.66 per share, which equates to a 19.3% yield.
Coal miner Coronado Global Resources Inc (ASX: CRN) is expected to pay 24.1 cents in FY24, according to consensus estimates. That's a 12% dividend yield.
Bell Potter is also far more bullish on this one, tipping 45.5 cents per share, which is a 23% yield.
