The Woodside Energy Group Ltd (ASX: WDS) share price is having a strong start to the week.
In morning trade, the energy giant's shares are up 2.5% to $35.01.
Why is the Woodside share price charging higher?
Investors have been scrambling to buy Woodside and other ASX energy shares after oil prices spiked on Monday morning.
According to Bloomberg, the WTI crude oil price is up 3.65% to US$85.81 a barrel and the Brent crude oil price is up 3.3% to US$87.35 a barrel.
This has been driven by concerns over oil supply from the Middle East following the terrible events that unfolded in the region over the weekend.
Here's the state of play in the sector at the time of writing:
- The Beach Energy Ltd (ASX: BPT) share price is up 2.5% to $1.56.
- The Karoon Energy Ltd (ASX: KAR) share price is up nearly 6% to $2.58.
- The Santos Ltd (ASX: STO) share price is up almost 3% to $7.56.
Will the gains last?
The CEO of Vanda Insights, Vandana Hari, believes that the rise in oil prices is a knee-jerk reaction and suspects that they could ease shortly. Hari told CNBC:
We may see a knee-jerk surge in crude prices when markets open on Monday. There will be some risk premium factored in as a default, until the market is satisfied that the event is not setting off a chain reaction and Mideast oil and gas supplies won't be affected.
This sentiment was echoed by Iman Nasseri from Facts Global Energy. Nasseri said:
The impact on the oil price will be limited unless we see the 'war' between the two sides expand quickly to a regional war where the U.S. and Iran and other supporters of the parties get directly involved.
Broker upgrade
Also giving the company's shares a boost today has been a broker note out of RBC Capital. Its analysts have upgraded Woodside's shares to an outperform rating from sector-perform.
The Woodside share price is now in positive territory on a 12-month basis following today's decline.
