Woodside Energy Group Ltd (ASX: WDS) shares have climbed higher into the green in Monday afternoon trade.
At the time of writing, the shares are up around 1% to $33.22 a piece.
The petroleum company's shares have rallied higher this year, up 41% year to date, thanks to tailwinds from ongoing oil supply concerns, inflated fuel prices, and ongoing volatility in the Middle East.
But it hasn't been smooth sailing. Woodside shares spiked to a 2.5-year high of $35.80 in early April, as conflict in the Middle East ramped up. But they slumped lower again by late June after conflict in the region cooled.
The shares zigzagged up and down from July through late September before rebounding by around 8% through October so far.
Now many are wondering: What's next for Woodside shares?
Can the oil and gas giant's share price rally even higher to a new annual peak? Or have they finally reached a ceiling?
Here's what the experts think.
Image source: Getty Images
What's next for Woodside shares?
After the October rally, it looks like the oil major's shares are now most likely trading around fair value.
Market Index data shows all brokers have a hold rating on Woodside shares. But the $30.21 average target price now implies a potential 9% downside ahead, at the time of writing.
TradingView data is a little more positive. Out of 18 analysts, six have a buy/strong buy rating, 10 have a hold rating, and two rate the stock as a sell.
The average $34.06 target price implies a potential 2% upside, at the time of writing.
But there is still some potential that Woodside shares could rally to a new annual high in coming months.
The maximum $43.78 target price implies a potential 31% upside ahead, at the time of writing. That's also around 22% higher than the annual high we saw earlier this year. If the maximum forecast comes to fruition, it would be the highest trading price Woodside shares have reached since mid-2011.
What could drive the oil and gas company's shares higher this year?
It looks like conflict in the Middle East will be ongoing for some time yet. I expect that continued disruptions to oil supply out of the region will continue to drive oil prices higher over the next 6 to 12 months.
Crude oil prices have softened to around US$115 per barrel at the time of writing, retreating from a multi high of nearly US$117 per barrel over the weekend. They're now a huge 65% higher than 12 months ago, and they're also up 9% over the past month alone, according to Trading Economics.
Middle Eastern crude exports have reportedly recovered to near pre-war levels, but a renewed escalation in the conflict could further disrupt regional energy supplies and put pressure on prices yet again.
And this is good news for ASX energy shares like Woodside. If oil stays above US$100 a barrel, Woodside will continue to benefit from higher realised prices.
