Santos Shares Jump Nearly 6% as Oil Prices Surge on Renewed Iran-US Strikes Near the Strait of Hormuz

SYDNEY — Shares of Santos Ltd surged Wednesday, trading at $7.50, up 41 cents, or 5.78 percent, as a fresh escalation between the United States and Iran near the Strait of Hormuz pushed global oil prices sharply higher, lifting Australian energy stocks broadly across the session.

Note: This article is intended to provide factual context and does not constitute financial advice. Readers should consult a licensed financial advisor before making investment decisions.

Wednesday's gain came after the United States carried out fresh airstrikes inside Iran overnight in response to attacks on commercial shipping in the Strait of Hormuz, prompting Iran to retaliate with missile and drone strikes against U.S. military sites in Bahrain and Kuwait. The renewed hostilities pushed the price of oil up nearly 5 percent, climbing above $76 a barrel, its highest level in roughly two weeks, according to reporting on the escalation. The Strait of Hormuz remains one of the world's most critical energy shipping routes, with roughly a fifth of the world's traded oil and natural gas passing through the narrow waterway during peacetime, making any disruption or threat to the passage a significant driver of global energy prices.

Santos, Australia's second-largest oil and gas producer, has been particularly sensitive to swings in energy prices tied to Middle East tensions throughout 2026. According to The Motley Fool Australia, Santos shares had already climbed more than 20 percent so far this year as of early March, a rally the outlet attributed in part to strengthening energy prices and lingering takeover speculation surrounding the company. Wednesday's jump extends that broader pattern, with oil and gas stocks historically among the most direct beneficiaries when geopolitical instability raises concerns about potential supply disruptions along key shipping corridors like the Strait of Hormuz.

Beyond the immediate catalyst tied to Middle East tensions, Santos has remained a focal point for takeover speculation over the past year. The company has previously attracted acquisition interest from major global energy players, including a failed roughly $30 billion bid from a consortium led by Abu Dhabi National Oil Company, operating under the XRG banner, which was ultimately withdrawn. Following that withdrawal, Goldman Sachs reinstated coverage of Santos with a buy rating and an $8.25 price target, citing what the firm described as further upside potential for the stock. RBC Capital similarly upgraded Santos to Outperform from Sector Perform, citing valuation support after the XRG proposal was scrapped, while later adjusting its price target to $7.50 following what the firm described as solid, in-line quarterly results from the company.

Analyst sentiment toward Santos has remained mixed but generally constructive in recent months. According to data compiled by StockAnalysis.com, Bernstein upgraded Santos to Outperform from Market Perform with a $7.30 price target, expressing a view that while lower oil and gas prices were expected in 2026, the firm remained "far less bearish" than some peers on the broader outlook for the sector. RBC Capital's Gordon Ramsay has periodically adjusted his rating on the stock as well, at one point downgrading Santos to Sector Perform from Outperform with a $7 price target amid concerns about conditions in the East Coast Gas Market, before later reversing course with a more constructive stance following the company's quarterly results.

Santos has also continued advancing several major operational projects throughout 2026. The company announced first oil from the initial phase of its Pikka development project on Alaska's North Slope, a milestone reached through the Lease Automated Custody Transfer metering system. Santos also received approval to proceed with its Agogo tie-in project in Papua New Guinea, a development in which the company holds a 39.9 percent stake through the PNG LNG joint venture, following sign-off from the broader joint venture partnership. Separately, Santos signed a 10-year agreement with the South Australian government to supply 20 petajoules of gas annually to help support the transformation of the Whyalla Steelworks, underscoring the company's continued role in domestic energy supply commitments alongside its international project portfolio.

Not all of Santos' recent news has been uniformly positive. The company temporarily shut down its Darwin liquefied natural gas plant earlier this year, disrupting exports from a supply chain that had only recently resumed operations at a time when broader gas markets were already tightening. Santos chief executive Kevin Gallagher also drew some attention in late February when he sold 830,132 shares on market at an average price of $6.75, generating proceeds of roughly $5.6 million. According to a director's interest notice reviewed by The Motley Fool Australia, the sale was primarily intended to fund personal tax obligations, with remaining proceeds tied to a broader reorganization of Gallagher's personal financial affairs, rather than reflecting any shift in his confidence toward the company. Santos shares continued rising in the days following that disclosure, suggesting investors largely looked past the insider transaction at the time.

Gallagher has also spoken publicly about broader policy concerns affecting the Australian energy sector, previously stating that Australia's reputation as a stable destination for energy investment had been damaged by a proposed 25 percent gas-export tax, a policy debate that has continued to factor into investor sentiment toward Santos and other domestic energy producers throughout the year.

Santos operates across three primary regional business units: the Cooper Basin, the combined Queensland and New South Wales operations, and its Papua New Guinea assets, which together make up the company's broader Eastern Australia and PNG business segment. The company's diversified project portfolio, spanning domestic gas supply agreements, LNG exports, and international developments in Alaska and Papua New Guinea, has continued to position Santos as one of the more closely watched energy names on the Australian Securities Exchange amid ongoing volatility tied to both global oil price movements and speculation about future corporate activity involving the company.

With Middle East tensions showing no clear signs of resolution following Wednesday's exchange of strikes, and with the broader outlook for Santos shaped by a combination of energy price volatility, project execution across its international portfolio, and lingering takeover speculation, investors are likely to continue watching the stock closely for further movement tied to both geopolitical developments and company-specific announcements in the weeks ahead.