Both the oil price and the Woodside Energy Group Ltd (ASX: WDS) share price both jumped today in response to further Iran conflict developments.
What’s going on in Iran now?
According to reporting by CNBC, the oil price rose more than 9% yesterday and is up another 2% today.
These gains came after further conflict between the US and Iran regarding the Strait of Hormuz, which is such an important conduit for oil, gas and other commodities the world uses.
Additionally, US President Donald Trump has announced a plan to introduce shipping fees in the Strait of Hormuz and blockage Iran ports again. He said US is the guardian of the oil route and would charge a 20% fee on all cargo shipped.
Energy flow was already disrupted, but with this latest news, it looks like the end of these issues are no longer as close as it seemed.
Woodside share price rises
The Australian energy giant is very leveraged to energy prices. New revenue can largely add to net profit before tax because its costs don’t usually rise in line with revenue.
It’s looking like this fuel situation will remain problematic for even longer than people were hoping, which is bad news for users of fuel, but likely helpful for Woodside’s earnings in the near-term.
This isn’t necessarily the best time to invest in Woodside shares because the Woodside share price has already risen in response to this news. We’d need to have a view that energy prices will keep rising from here, which they could if the energy route remains shut.
Where to invest now?
I don’t think energy flows will be disrupted forever, so shares that are down based on the energy pain could be opportunistic buys during this period.
There are plenty of opportunities, which look oversold to me, with both ASX growth shares and ASX dividend shares.
