There are not many S&P/ASX 200 Index (ASX: XJO) shares that have performed worse over the last two years than one of the largest ASX energy shares. The Woodside Energy Group Ltd (ASX: WDS) share price has declined by around 35%. It has dropped around 12% since 12 November, as the below chart shows.
It's normal for there to be volatility on the share market and it's particularly normal for energy shares to experience ups and downs. Energy prices are always on the move and this can sometimes lead to big swings of share prices.
Production costs don't typically change much month to month, so energy price shifts can dramatically change profitability. Any extra revenue for the same volume of production can largely add to net profit, while a reduction of revenue dollars will mostly flow onto the net profit line too.
Let's look at expert views on energy prices before looking at the appeal of the Woodside share price.
2026 surplus
In a note last week, broker UBS cut its 2026 oil price forecast by US$2 per barrel to US$62 per barrel, driven by a larger oil surplus that's now up to 1.9 million barrels per day for this year, in line with 2025.
However, UBS expects the surplus to narrow over the course of the year, leading to its oil forecast of US$60 per barrel in the first quarter of 2026, rising to US$64 per barrel in the fourth quarter of 2026.
The broker noted that geopolitical risks persist and potential supply disruptions in Russia, Venezuela and Iran could keep volatility elevated.
A decline of 0.5 million barrels per day in supply may support the oil price in the mid-to-high US$60s per barrel, according to UBS.
UBS then commented:
We see some risk of oil demand being underestimated noting that the IEA has been lifting estimates of 'missing barrels' & oil on water, with tracking challenged by evolving logistics for sanctioned producers. However we see upside risk as likely capped due to OPEC+ retaining spare capacity of 4.1mb/d (ex-Iran/Venezuela).
We expect OPEC+ policy to be a less important driver for 2026 (vs 2025) as much of the voluntary cuts have already been unwound. Our base case assumes OPEC+ unwinds the remainder of the 1.65Mb/d voluntary cuts from Apr-Dec26.
Is the Woodside share price attractive?
UBS is expecting Woodside's quarterly production performance for the three months to December 2025 to show production was in line with expectations.
The broker noted the earlier-than-expected arrival of the floating production unit on site in WA introduces the potential for Scarborough gas to flow earlier than the current estimate of the fourth quarter of 2026, which could mean production is a bit stronger than expected.
UBS says that it's neutral on the Woodside share price, with a price target of $23.50. That implies little movement over the next 12 months.
The broker projects Woodside generated $1.082 of earnings per share (EPS) in 2025. It reduced its projection for 2026 EPS by 12% to 57.7 cents and reduced the 2027 EPS projection by 3% to 95.4 cents.
