S&P/ASX 200 Index (ASX: XJO) energy shares are taking a tumble today amid a big overnight fall in global oil prices.
The ASX 200 itself is down 0.9% in early afternoon trade on Tuesday.
The benchmark Aussie index is following the lead of United States markets, where the S&P 500 Index (SP: .INX) closed down 1.8% overnight as President Donald Trump presses ahead with instituting steep tariffs on exports from Canada, Mexico, and China.
But ASX oil and gas stocks are trailing the benchmark performance, with the S&P/ASX 200 Energy Index (ASX: XEJ) down a sharp 2.2% at this same time.
Here's how these top four ASX 200 energy shares are tracking today:
- Woodside Energy Group Ltd (ASX: WDS) shares are down 1.9% at $24.77
- Santos Ltd (ASX: STO) shares are down 2.6% at $6.49
- Beach Energy Ltd (ASX: BPT) shares are down 2.0% at $1.41
- Karoon Energy Ltd (ASX: KAR) shares are down 2.7% at $1.53
So, what's happening?
Image source: Getty Images
ASX 200 energy shares catching multiple headwinds
Oil prices and ASX 200 energy shares are catching headwinds on several fronts today.
First, investors are concerned that the new US tariffs mentioned up top could crimp global economic growth and reduce global oil demand in the year ahead.
The oil price also got hit from the latest batch of jobs, spending, and manufacturing data out of the US, all of which point to slowing growth in the world's top economy.
And perhaps the biggest, and widely unexpected development, was the announcement by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) that its members will begin to increase oil production commencing in April.
Many analysts had been forecasting another cut from the cartel in 2025 to support the oil price, or at the least, seeing OPEC+ maintaining its current production limits. But, with Trump pressing for lower energy prices, Bloomberg reported that the cartel will begin to gradually restore 2.2 million barrels per day of production by 2026.
"This gradual increase may be paused or reversed subject to market conditions. This flexibility will allow the group to continue to support oil market stability," OPEC+ stated.
"The optics around any reinstatement of supply, even if incremental and small, will be seen as price-negative," Harry Tchilinguirian, head of oil research at Onyx Commodities, said (quoted by Bloomberg).
The more than 2% fall in Brent crude oil following this news is seeing investors bid down ASX 200 energy shares today.
Brent crude is currently trading for US$71.62 per barrel, down from US$82.03 per barrel on 15 January.
And with Trump taking a decidedly softer tone on Russia than the previous administration, it's not out of the question that we'll see sanctions on Russian oil exports eased in the year ahead.
