Energy stocks rally as crude oil hits USD70.34 a barrel
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The news: ASX- listed energy stocks were among the strongest performers in morning trade after Brent crude price jumped 13% to above USD82 a barrel at the open, before easing to USD70.34.
Shares in Woodside Energy (+5.58), Santos (+5.10%), Yancoal (+5.55%), Energy Resources of Australia (+16.67%) and Karoon Energy (+13.92%) all traded higher at 2:49pm AEDT.
The context: Oil markets are now bracing for prolonged volatility and disruptions caused by the US and Israeli attacks on Iran that have stalled oil transportation in the Strait of Hormuz.
Around a fifth of global oil and liquefied natural gas typically flows through the Strait daily. While Iran said the waterway remains open, it claimed responsibility for attacks on three oil tankers overnight. Shipowners have halted shipments through the chokepoint after the US declared a maritime warning zone.
JPMorgan Chase & Co analysts Natasha Kaneva and Lyuba Savinova said the disruption at the Strait of Hormuz is “largely precautionary”, however noted that risks could further escalate if Iran’s leadership loses control of the Islamic Revolutionary Guard Corps, raising the odds of more unpredictable attacks on regional energy assets.
What they said: "If the conflict lasts more than three weeks, Gulf Cooperation Council oil producers would exhaust storage capacity and would be forced to shut in production,” the analysts said.
The source: Bloomberg
