Woodside (ASX:WDS) Rises as Hormuz Strait Blockade Stokes Oil Fear

The share price of the Australian petroleum exploration and production company Woodside Energy Group Ltd  (ASX:WDS) rallied this week amid the worsening geopolitical tensions in West Asia.

WDS Share Price

The company’s stock is up by 10.20% over the past five days. On Tuesday, WDS climbed to a high of AUD 30.79, up by 1.82% from the previous close of AUD 30.24.

The stock rallied as the conflict in Iran threatens to disrupt global oil supplies. Following the US and Israel’s decision to launch an attack against the petrostate, Iran’s Revolutionary Guard Corps (IRGC) said that the Strait of Hormuz is closed.

Blockade

The Strait of Hormuz is one of the world’s most strategically important choke points. It serves as the only sea passage from the Persian Gulf to the open sea and is described as the most important energy transport route with roughly 20% of global oil supplies passing through it.

Iran has threatened to torch ships passing through the waterway, grounding to near halt oil tankers in the region. 

“The strait (of Hormuz) is closed. If anyone tries to ​pass, the heroes of the Revolutionary Guards and the regular navy will set ​those ships ablaze,” said Ebrahim Jabari, a senior adviser to the Guards commander-in-chief, according to Reuters.

Oil Price Increase

The blockade raised fears that oil prices will rise further. Akuta Tomomichi, Senior Economist at Mitsubishi UFJ Research and Consulting told NHK that the impact could be contained if the closure is only for a short period but longer closure will have worse implications. 

“If it becomes prolonged, prices for gasoline, diesel fuel, and kerosene would of course rise. I think it could spill over into electricity and gas bills,” Tomomichi said. “Higher costs for agriculture and fisheries could push up the prices of fresh food.”