ASX 200 Slides, but Energy Giants Woodside and Santos Rally

Energy stocks on the ASX rallied on Monday, even as the broader market declined driven by rising oil prices and geopolitical tensions.

By early afternoon on Monday, the ASX 200 has declined by 0.52% while the S&P/ASX 200 Energy Index (ASX: XEJ) has gained 2.3%.

Impressive performance from major oil and gas companies

The major Australian oil and gas companies have shown positive movement.

Shares of Woodside Energy Group Limited (ASX: WDS) are up by 3.04% which brings its total gain for the year to 45.17%. The company now has a market capitalisation of $65.10 billion. Even after this rise, the company offers an annual dividend yield of 4.82%. It has distributed fully franked dividends twice a year for many years which shows its consistency while the price/earnings ratio is now at around 17.

Santos Limited (ASX: STO) 

has also moved higher. Its shares are up by 1.9% which pushes its year-to-date gain to 30.71%. The company has a market capitalisation of $26.19 billion at present. The annual dividend yield for Santos is 4.32% and Its price/earnings ratio is around 22.7.

These valuations of Woodside and Santos suggest that if the oil prices stay elevated for a longer period, then the stock prices can continue to surge.

Failed peace talks push energy stocks higher

Investors in Australia had entered the weekend with some hope that discussions between the United States and Iran could bring a quick end to the conflict. The expectations were not strong but they still influenced market sentiment.

Energy stocks on the ASX 200 moved up after the news that USA-Iran peace talks did not succeed. This changed the outlook immediately and shifted attention toward possible supply disruptions.

It was also reported that Donald Trump expressed disappointment after the failed talks. He stated that the United States will impose a blockade on all ships that use Iranian ports. The blockade is expected to begin on Monday night Australian time.

Oil supply concerns drive global price surge

The possibility of losing a large volume of oil supply has affected global markets.
Around two million barrels of Iranian oil each day had still been moving through the Strait of Hormuz. Any disruption to this flow creates concern about supply shortages.

Brent crude oil prices increased by 7.7% overnight and is now trading at US$102.26 per barrel. This rise in prices has supported energy stocks such as Santos and Woodside which benefit from higher prices.

The recent surge adds to a strong trend seen this year. Brent crude oil prices have increased by about 68.4% in 2026 so far which highlights the scale of the rally.

Market contrast becomes clear

The overall market decline and the rise in energy stocks show a clear contrast.
While broader equities are under pressure, energy companies are surging due to global developments in oil supply. This divergence reflects how external factors such as geopolitical events can influence specific sectors in a different way.
Energy stocks have therefore become a key area of strength in an otherwise weak market session.

(Source: Company Report)