Three ASX stocks to track as crude prices hit 7-year high

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Three ASX stocks to track as crude prices hit 7-year high

Crude oil at seven-year high
Image source: Copyright © 2022 Kalkine Media®

Highlights

  • Crude oil prices jumped to seven-year high levels amid ongoing political unrest across the globe.
  • Turkey’s state pipeline operator Botas has cut the oil flow at the Kirkuk-Ceyhan pipeline following an explosion near Kahramanmaras.
  • Yemen's Houthi rebels targeted a key oil facility of the UAE on Monday.

Crude oil prices jumped for the fourth consecutive day on Wednesday to reach seven-year high levels amid ongoing political unrest across the globe. An outage on a pipeline from Iraq to Turkey has recently sparked concerns about its supply, which is already tight. Ongoing geopolitical tensions in the United Arab Emirates (UAE) and Russia have made the situation worse.

Turkey-Iraq pipeline issue

Turkey’s state pipeline operator Botas has cut the oil flow at the Kirkuk-Ceyhan pipeline, intended to transport crude oil from Kurdistan for export from the Ceyhan port in Turkey, following an explosion near the southeastern province of Kahramanmaras.

The latest accident in a series of supply disruptions came just a day after a drone attack on the UAE by Yemen’s Houthis on Monday ignited the momentum in oil prices.

Yemen’s attack on the UAE

Yemen's Houthi rebels targeted a key oil facility of the UAE on Monday, killing three people and causing a fire at Abu Dhabi international airport. In a retaliative move, Saudi Arabia also launched air raids in Yemen's capital Sanaa, killing more than a dozen people.

Oil barrel

Source: © Bon4ire | Megapixl.com

The recent attack on the UAE may have been prompted by the UAE-backed military's fresh advancements in Yemen, which has made territorial gains against the Houthis in the past few weeks. However, oil watchers say it is not the only reason behind the attack. The attack on Abu Dhabi could also be a severe warning by Iran as world powers are holding talks with Iran to revive the significant 2015 nuclear deal. The US has been forcing the UAE to enforce Iran sanctions effectively.

Russia-Ukraine crisis

Adding to the global tension, Russian troops are lined up on the Ukraine borders, ready to invade at any point. It is adding to supply disruption concerns at a time when OPEC+ is already struggling to achieve its agreed target to add 400,000bpd supply each month.

With multiple factors contributing to the surge in oil prices, oil and gas players across the globe are capitalising on the rally. Let's look at three ASX-listed oil stocks that would be under the spotlight.

ASX O&G stocks

Source: ASX as of 19 January 2022

Woodside Petroleum Ltd

In a major relief to Woodside Petroleum (ASX:WPL), the company’s proposed acquisition of BHP Petroleum was not opposed by the Australian Competition & Consumer Commission (ACCC), as per an update on 16 December 2021. Following the acquisition, Woodside’s share of domestic gas will be approximately 20 per cent.

Also Read: Woodside’s (ASX:WPL) shares rise despite gas project heading to WA court

Santos Limited

Oil Rig

Source: © Tebnad | Megapixl.com

In December 2021, Santos Limited (ASX:STO) announced that the merger of Oil Search (ASX:OSH) and STO was executed by way of a scheme of arrangements under the PNG law, implemented on 17 December 2021.

Also Read: Santos (ASX:STO) & Oil Search (ASX:OSH) merger comes into effect

Ampol Limited

In early December, Ampol Limited (ASX:ALD) announced the sale of 20 core freehold Convenience Retail sites to an organisation where Charter Hall Retail REIT will acquire a 49 per cent interest and ALD would own 51 per cent interest. The transaction is anticipated to deliver nearly AU$48 million in net proceeds to ALD.

Interesting Read: Crude oil slips on US interest rate hike concerns

Bottom Line

Crude oil prices have shot up to a level last seen in 2014 amid tight supply and ongoing global political unrest. Energy companies are likely to benefit from high crude prices, which are expected to boost their revenues.

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