This ASX energy stock has surged recently as investors grow more optimistic about the fuel giant's outlook.
The share price of Ampol Ltd (ASX: ALD) has surged 15% in the past 5 trading days. Strong refining margins, progress on a major acquisition, and rising oil prices have all helped push the ASX energy stock to $32.06 at the time of writing.
Let's have a closer look at what's driving Ampol's momentum – and the risks to watch.
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Supportive oil prices
One key tailwind for the ASX energy stock is the rebound in global oil prices.
Recent geopolitical tensions in the Middle East have lifted crude prices, with Brent crude recently trading around US$80 per barrel after surging in recent weeks.
Higher oil prices can boost refining margins and support earnings for companies with refining operations like Ampol. The company's Lytton refinery in Queensland has already benefited from stronger margins in recent periods, helping lift profits.
If oil markets remain tight, that could continue to underpin Ampol's earnings and the share price of the ASX energy stock.
While higher oil prices can help profits, they also add volatility.
Oil markets are notoriously cyclical. Some analysts expect crude prices to soften over time due to global oversupply, with forecasts suggesting Brent could average around US$60 per barrel in 2026 if supply growth outpaces demand.
Lower oil prices could reduce refining margins and weigh on earnings.
Growth from EG Australia acquisition
Another potential catalyst for the ASX energy stock is Ampol's planned $1.1 billion acquisition of EG Australia, which operates hundreds of fuel and convenience stores nationwide.
The deal would significantly expand Ampol's retail footprint and accelerate growth in its higher-margin convenience business. Analysts expect the acquisition to add meaningful earnings once completed.
Convenience retail – including shop sales and premium fuels – is becoming a larger driver of profit for Ampol as traditional fuel markets evolve.
The EG Australia acquisition still requires regulatory approval, and any conditions or delays could impact the expected benefits.
While many analysts believe the deal will proceed with some site divestments, uncertainty around the outcome remains a key risk for investors. Ampol has already offered to divest 19 retail sites as part of its original remedy proposal and may propose further remedies.
What next for Ampol shares?
According to consensus estimates, the ASX energy stock currently carries a buy rating from most analysts. The most bullish 12-month price target is $35, implying a 9% upside from current levels.
The average price target is $32.63. That implies roughly a potential gain of 2% from recent levels.
Foolish Takeaway
Ampol shares have rallied thanks to supportive oil prices, improving refining margins, and optimism about the EG Australia acquisition.
Broker forecasts suggest the ASX energy stock could still have upside, but investors should remember that the company's fortunes are closely tied to volatile energy markets.
If oil prices remain elevated and the acquisition proceeds smoothly, Ampol could continue delivering solid returns. But as with many energy stocks, the path ahead may not be a smooth ride.
