Santos and Woodside share prices drop as oil prices retreat

As oil prices fall, we examine the recent geopolitical events that led us to this point.

The oil price: a play-by-play

Geopolitical tensions look to have eased somewhat, with Trump yesterday holding a White House press conference and declaring that:

‘Iran appears to be standing down, which is a good thing for all parties concerned and a very good thing for the world.’

The response in the oil market was a relatively dramatic one: with WTI Crude falling below US$60 per barrel (down 4.39%), while Brent Crude fell 3.65% to US$65.78 per barrel.

The stock of Saudi Aramco – the world’s largest oil producer – is now down 2.6% in the last five sessions, to 34.20 riyals.

Positively at least, Trump further said:

‘The United States is ready to embrace peace with all who seek it.’

Woodside and Santos share prices fall

This all comes after U.S. President Donald Trump last week ordered an airstrike that killed the key Iranian Commander Qassem Soleimani.

As a consequence, concerns over escalating geopolitical tensions reached fever-pitch yesterday, as Iran launched its own retaliatory missile strike on two U.S. bases, based out of Iraq. The U.S. noted that there were no casualties from this strike.

Oil prices and ASX-listed oil and gas stocks rose sharply in response to this news, while gold climbed past the US$1,600 per ounce mark, as investors rushed into the safe-haven asset.

Yet as tensions ease of the back of Trump’s peache-centric press conference, some of Australia’s mainstay oil and gas companies have seen their share prices retreat in-step.

At the market open this morning, Santos (ASX: STO) dropped 1.63% to $8.745 per share, while Woodside Petroleum (ASX: WPL) fell 1.38% to $35.640 per share.

Beach Energy also saw its share price fall by as much as 2.42% in the first hour of trade.

Unrelated to these broader macroeconomic factors, Woodside Petroleum today also announced that it had received Exploration Authorisation for the company’s Sangomar Field Development.

As a standalone facility, it is expected that the Sangomar site will ‘have a production capacity of 100,000 bbl/day.'

The company is targeting first oil by early CY23.

Other consequences in focus

Though oil prices may have returned to pre-strike levels, the dynamic between Iran and the U.S. has indeed changed. In Trump’s latest press conference, he also noted that the:

‘The United States will immediately impose additional punishing economic sanctions on the Iranian regime.’

Trump further pointed out that:

‘These powerful sanctions will remain until Iran changes its behaviour.’

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