Woodside Energy Group Ltd (ASX: WDS) shares have cooled sharply after one of their strongest starts to a year in recent memory.
The energy giant surged almost 50% during the first four months of 2026 as oil prices climbed amid escalating geopolitical tensions. Concerns over conflict in the Middle East and the temporary closure of the Strait of Hormuz sent crude prices higher, helping push Woodside shares above $35.
Since then, sentiment has shifted. Oil prices have retreated as shipping through the Strait resumed and hopes of a fragile peace agreement between Iran and the United States eased supply concerns. As a result, Woodside shares have fallen around 10% over the past month.
Even so, the stock remains up about 18% year to date, and edged 0.5% higher to $28.01 in Monday morning trade.
So, where do Woodside shares go from here?
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A business benefiting from higher energy prices
Woodside remains one of Australia's largest oil and gas producers, with a globally diversified portfolio of LNG and offshore energy assets.
The company's earnings remain closely tied to commodity prices, which means periods of elevated oil and gas prices can significantly boost profitability and shareholder returns.
That was evident in Woodside's March quarter update, released on 29 April. Operating revenue increased 7% from the previous quarter to US$3.26 billion, despite production falling 8% to 45.2 million barrels of oil equivalent (MMboe) due to severe weather in Western Australia.
The production decline was more than offset by stronger commodity prices. Woodside's average realised price rose 11% quarter on quarter to US$63 per barrel of oil equivalent, highlighting the company's leverage to higher energy prices.
Dividends remain a major attraction
Another key reason many investors continue to favour Woodside shares is income.
The company paid eligible shareholders a fully-franked interim dividend of 83.5 cents per share in March. Combined with its fully-franked final dividend of 81.8 cents per share, Woodside currently offers a trailing fully-franked dividend yield of around 6%.
For income-focused investors, that remains one of the stock's biggest attractions, particularly if energy prices remain supportive over the medium term.
What do brokers expect?
Analyst sentiment remains cautious but constructive. TradingView data shows that most brokers currently rate Woodside shares a hold, reflecting uncertainty about future oil prices following this year's sharp volatility.
Even so, the average broker price target sits at approximately $32.71, implying potential upside of nearly 17% from current levels. The most optimistic analyst believes Woodside shares could reach $45.41, representing upside of around 62%.
At the other end of the spectrum, the most bearish forecast is $24.61, suggesting a downside of roughly 12%.
The wide range of price targets reflects just how dependent Woodside's outlook remains on global energy markets.
The risks ahead
The biggest risk for Woodside remains the direction of oil and LNG prices. If geopolitical tensions continue to ease and global supply increases, commodity prices could come under further pressure, reducing earnings and cash flow.
At the same time, global economic weakness could soften energy demand, while cost inflation and project execution risks remain ongoing challenges for large-scale LNG developments.
However, if oil prices remain elevated or geopolitical risks flare up again, Woodside's earnings could strengthen quickly.
