Santos Ltd (ASX: STO) shares are up around 2% to $8.28 at the time of writing.
Today's increase means the shares have rebounded 8% over the past month and are up 35% for the year-to-date. The oil and gas major's shares are also around 4% higher than 12 months ago.
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Why are Santos shares climbing higher?
Santos shares have trended higher through 2026 so far as recurring tensions between the US and Iran continue to fuel concerns over global oil supplies and supported energy prices.
The shares spiked in February and March, around the time news first broke that conflict had escalated between the two nations. The shares continued climbing in value as the war heated up.
Rising oil prices were the main tailwind for Santos shares, as tight oil supply made prices highly volatile.
But every time there is renewed optimism about a potential US-Iran peace agreement, the price of oil softens, and the Santos share price follows suit. In June and July the share price tumbled before rebounding again over the past month.
In mid-August, after the company posted its half-year FY26 results, Santos shares reached a multi-year high of $8.45 a piece.
The company reported a 2% year-on-year increase in sales revenue to US$2.62 billion. Production volumes were also higher, up 1.7% to 48 million barrels of oil equivalent (mboe).
But Santos also posted a 19% decline in its half-year statutory net profit after tax (NPAT), which fell to US$355 million.
Santos also managed to generate free cash flow from operations from its strong base business performance.
The company is well placed to increase its production in the coming reporting periods, which could help boost earnings.
What do brokers tip for the ASX energy shares over the next 12 months?
Brokers are mostly bullish on Santos shares, with the majority tipping upside.
Market Index data shows all brokers have a strong buy rating on the shares. The $8.57 average target price implies an upside of around 3% over the next 12 months, at the time of writing.
Sentiment is similar on TradingView. The majority (13 out of 15) have a buy/strong buy rating on the shares. One rates Santos as a hold, and another rates it as a sell.
The $8.72 average target price implies a slightly higher 5% upside ahead, but some tip the shares to jump another 25% to $10.42 by this time next year.
Citi reaffirmed its buy rating on the ASX 200 energy share following its half-year update. The broker also increased its target price to $9, which is a little above the average.
Morgans maintained its hold rating on Santos shares following the announcement. The broker noted that the results beat estimates, but that it is impossible to quantify the risks posed by the Federal Government's gas reservation policy ahead of its release.
