Geopolitical tensions and supply disruptions, especially conflicts affecting key shipping routes like the Strait of Hormuz, have shaken global energy markets and pushed oil and gas prices sharply higher.

Rising oil and gas prices often trigger renewed interest in energy producers in the Australian market. When crude benchmarks such as Brent and WTI move higher, the impact tends to flow directly into the earnings of companies involved in exploration, production, and liquefied natural gas (LNG) exports. In simple terms, the higher the commodity price, the more revenue producers can generate from each barrel of oil or unit of gas sold.

On the ASX, the companies most likely to benefit from this environment are those with large upstream operations. These businesses extract and sell hydrocarbons directly, meaning their margins expand quickly when global energy prices climb. Australia hosts several such players that operate offshore oil fields, LNG projects, and domestic gas infrastructure. The country’s energy sector is heavily tied to Asian demand, particularly from Japan, China, and South Korea, which rely on Australian LNG exports to meet power and industrial needs.

What are the factors driving soaring oil and gas prices?

Oil and gas prices rarely move for a single reason. Instead, they rise when several global forces converge, from geopolitical tensions to shifts in supply and demand. Recent price increases reflect a mix of structural market pressures and short-term disruptions in energy supply.

Below are the key factors driving soaring oil and gas prices:

Geopolitical tensions and conflicts

Wars, sanctions, or instability in major producing regions can disrupt global supply. For example, conflicts in the Middle East have threatened key energy infrastructure and shipping routes, pushing oil above $100 per barrel in some cases.

Disruptions to major transport routes

Strategic chokepoints such as the Strait of Hormuz, where around 20% of global oil flows, are crucial for global energy trade. Any closure or shipping risk can immediately drive prices higher due to fears of supply shortages.

Supply cuts by major producers

Organisations such as OPEC+ influence global prices by adjusting production levels. When member countries reduce output or delay supply increases, global supply tightens, and prices rise.

Growing global energy demand

Economic growth, especially in large economies like China and India, increases demand for oil and natural gas. Rising industrial activity, transport demand, and power consumption all put upward pressure on prices.

Weather disruptions and operational outages

Severe winter weather, technical failures, or natural disasters can interrupt production and reduce supply. For instance, disruptions to North American production and export flows have recently reduced global supply levels.

Market speculation and financial trading

Energy markets are heavily traded in futures exchanges. Expectations about future supply shortages, geopolitical risk, or economic growth can lead traders to buy oil contracts, pushing prices higher even before physical shortages occur.

Government policies and sanctions

Sanctions on major oil-producing countries or export restrictions can reduce available supply and create market uncertainty, which tends to lift prices.

Best Four ASX oil and gas Stocks to Invest in Now

Here are the best ASX oil and gas stocks that will benefit the most from the soaring oil and gas prices:

Santos Limited (ASX: STO)

Source: asx.com

Santos Limited is one of Australia’s largest independent oil and gas producers and a major supplier of natural gas and liquefied natural gas (LNG) in the Asia-Pacific region. Founded in 1954 and headquartered in Adelaide, the company explores, develops, produces, transports, and markets hydrocarbons, including natural gas, crude oil, LNG, condensate, and LPG.

Santos operates across several core regions: Australia, Papua New Guinea (PNG), Alaska, and Timor-Leste, with large-scale projects in the Cooper Basin, Queensland, Western Australia, and offshore Northern Australia. These assets form a diversified portfolio spanning upstream production, LNG export infrastructure and gas supply for domestic markets.

One of Santos’ most important growth platforms is its LNG business, including stakes in the PNG LNG project and Gladstone LNG, both of which supply gas to major Asian markets such as Japan, South Korea and China. LNG exports have become a key revenue driver as Asian economies continue to rely on Australian gas for energy security.

In recent years, Santos has also been developing large new projects such as the Barossa gas project offshore Northern Australia and the Pikka oil project in Alaska. These projects are expected to significantly increase production volumes and strengthen the company’s position as a global energy supplier.

Strategically, Santos is transitioning toward a lower-carbon future while continuing to focus on natural gas as a “transition fuel.” The company is investing in carbon capture and storage (CCS) and other decarbonisation technologies as part of its long-term sustainability strategy.

Santos combines long-life gas resources, LNG export infrastructure and new growth projects, positioning it as one of the most influential energy companies on the ASX.

Financials

Santos remains a large-scale energy producer with substantial revenue, profit generation and cash flow. However, like most commodity producers, it is closely tied to global oil and gas prices.

For the 2025 financial year, Santos reported revenue of about US$4.94 billion, a 8% decline from the previous year due to weaker commodity prices. Despite the revenue drop, the company maintained strong operational performance and cost discipline.

Underlying net profit after tax reached around US$898 million, while statutory net profit was approximately US$818 million. Although profits declined compared with the previous year, the company still generated solid cash flow and maintained its dividend policy.

Santos produced roughly 87.7 million barrels of oil equivalent (mmboe) during 2025 and recorded sales volumes of about 93.5 mmboe across its portfolio of LNG, gas and liquids assets. The company’s operational efficiency helped generate approximately US$1.8 billion in free cash flow, demonstrating the strong cash-generating capacity of its assets even during weaker price environments.

Liquidity remains healthy as well. The company has strengthened its balance sheet and maintains billions in available liquidity with manageable debt levels, giving it financial flexibility for project development and shareholder returns.

Santos also continues to pay dividends to shareholders, including a final dividend of about 10.3 US cents per share for FY2025.

The financial profile of Santos reflects a mature energy company with strong operating cash flow, moderate leverage and diversified production assets. However, earnings remain sensitive to fluctuations in global oil and gas prices.

Outlook

The ramp-up of major development projects and global energy demand trends largely shape Santos' outlook over the next several years.

One of the most important near-term catalysts is the Barossa gas project, which has begun supplying LNG to the Darwin LNG plant. This project replaces declining gas from the Bayu-Undan field and extends the life of the Darwin LNG facility for decades.

Another major growth driver is the Pikka Phase 1 oil development in Alaska, which began production in the mid-2020s. Together with Barossa, these projects could increase Santos’ production by 25–30% by 2027, significantly boosting revenue potential.

Analysts also expect the company’s earnings to gradually expand over the coming years as production increases and LNG exports remain strong. Forecasts suggest earnings growth of around 13% annually, supported by improving margins and stable gas demand in Asia.

Demand fundamentals for LNG remain supportive. Countries across Asia continue to rely on imported natural gas as a cleaner alternative to coal, particularly as they transition toward lower-carbon energy systems. This structural demand provides long-term support for companies like Santos that operate large LNG export projects.

However, several risks remain. Oil and gas prices are cyclical and can fluctuate significantly depending on global economic conditions, geopolitical tensions and supply changes. Additionally, large projects such as Barossa and Pikka entail execution and regulatory risks.

Santos appears positioned for a period of production growth and improving cash flow, driven by new projects and strong LNG demand. If commodity prices remain supportive, the company could deliver stronger earnings and shareholder returns over the coming decade.

Karoon Energy (ASX: KAR)

Source: asx.com

Karoon Energy is an Australian-listed oil and gas exploration and production company with international operations focused mainly on offshore oil assets. The company was founded in 2003 and is headquartered in Melbourne, Australia. Over the past decade, Karoon has gradually transitioned from an exploration-focused business into a producing energy company with significant offshore assets.

Today, Karoon’s operations are concentrated in Brazil and the United States, two important offshore energy regions. Its core producing asset is the Baúna Project located in the Santos Basin offshore Brazil. Karoon owns and operates this oil field with 100% interest, having acquired it from Petrobras in 2020. The project includes the Baúna, Piracaba and Patola fields and forms the backbone of the company’s production and cash flow.

To diversify its production portfolio, Karoon expanded into the U.S. Gulf of Mexico by acquiring the Who Dat oil and gas assets in 2023. This move significantly increased the company’s production capacity and provided access to one of the world’s most established offshore oil basins.

Karoon focuses on developing offshore oil projects with strong economics and stable regulatory frameworks. By combining Brazilian production with U.S. Gulf assets, the company aims to build a balanced international portfolio that can generate steady cash flow while still providing exploration upside.

Strategically, Karoon’s growth model involves acquiring underdeveloped oil fields, improving operational efficiency, and extending production life through drilling and field optimisation programs. With relatively low operating costs and established infrastructure, the company has positioned itself as a mid-tier independent oil producer on the ASX energy market.

Financials

Karoon Energy’s financial performance reflects its transition from exploration to full-scale oil production. The company now generates substantial revenue from its producing assets, although results remain influenced by global oil prices.

In the most recent financial reporting period, Karoon generated around US$675 million in revenue over the last twelve months, reflecting strong output from the Baúna field and its newer Gulf of Mexico assets.

For the first half of 2025, the company reported revenue of approximately US$308.3 million, with underlying EBITDAX of about US$200.5 million. Net profit after tax for the period was roughly US$45 million, down from the previous year due to weaker oil prices and reduced sales volumes.

Production is another key indicator of the company’s performance. Karoon delivered a total production of about 10.3 million barrels of oil equivalent (MMboe) in 2025, placing it near the top end of its guidance range.

The company also maintains a relatively strong balance sheet. By the end of 2025, Karoon reported liquidity of around US$546 million, including cash and available credit facilities. This financial flexibility allows the company to fund drilling campaigns, maintain infrastructure and potentially pursue further acquisitions.

Operational performance has also improved thanks to strong reliability at the Baúna floating production facility, which recorded efficiency levels close to 99%.

Karoon has evolved into a profitable mid-tier oil producer with stable cash flow, though its earnings remain closely linked to oil price cycles and production levels from its offshore fields.

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Outlook

Karoon Energy’s future outlook depends largely on three factors: production stability, asset optimisation, and global oil prices. The company is now focused on maximising output from its existing fields while exploring opportunities to expand its asset base.

A key growth driver is the continued development of the Baúna field in Brazil. The company has been investing in drilling programs, reservoir management and facility upgrades to extend the field’s productive life. Recent reserve reassessments have lifted the project’s 2P reserves to approximately 52.7 million barrels, strengthening the asset's long-term outlook.

In addition, Karoon’s entry into the U.S. Gulf of Mexico through the Who Dat project significantly diversified its production base. This region is one of the world’s most mature offshore oil provinces and offers potential opportunities for further development and exploration.

For 2026, the company expects production guidance in the range of about 8.1–9.2 MMboe, reflecting natural field decline and maintenance activities before potential improvements later in the year.

Despite slightly lower-than-expected production, management continues to focus on cost efficiency and operational reliability, which could help protect margins amid fluctuating oil prices.

The broader energy market also supports Karoon’s long-term outlook. Global demand for oil and gas remains strong, particularly as developing economies expand and energy security becomes a priority for many countries. Higher oil prices can directly boost revenue for producers like Karoon.

However, risks remain. Offshore projects carry operational complexity, and revenue is highly sensitive to global oil price volatility.

If Karoon maintains production efficiency and continues optimising its offshore assets, the company could remain a solid mid-tier oil producer with steady cash generation and potential growth opportunities in the international energy market.

Beach Energy (ASX: BPT)

Source: asx.com

Beach Energy is an Australian oil and gas exploration and production company headquartered in Adelaide. Founded in 1961, the company has grown into one of Australia’s major domestic gas suppliers and a mid-tier energy producer listed on the ASX. Its core business involves exploring, developing and producing natural gas, oil and natural-gas liquids, with a strong focus on supplying gas to Australia’s domestic energy market.

Beach Energy operates across several important basins in Australia and New Zealand. Its largest producing region is the Cooper Basin, located in South Australia and Queensland, where the company has long-standing operations and infrastructure. The Cooper Basin remains a major source of oil and gas production and provides a stable foundation for the company’s revenue base.

Beyond the Cooper Basin, Beach Energy has significant assets in the Otway Basin (Victoria and South Australia), the Bass Basin (Tasmania) and the Perth Basin in Western Australia. These areas contain offshore and onshore gas fields that supply domestic markets and support liquefied natural gas (LNG) export projects.

One of the company’s most important development projects is the Waitsia Gas Project in Western Australia, a joint venture with Mitsui of Japan. The project is expected to supply gas to the North West Shelf LNG export facility and significantly increase Beach Energy’s production capacity.

Strategically, Beach Energy focuses on natural gas as a key transition fuel in Australia’s energy system. The company plays a major role in domestic gas supply, providing fuel for electricity generation, industry and households. With multiple producing basins and new development projects underway, Beach Energy has positioned itself as a significant player in Australia’s gas sector. Read our latest detailed report on Beach Energy here.

Financials

Beach Energy’s financial performance reflects the cyclical nature of the oil and gas industry. Revenue and profits are closely tied to commodity prices, production volumes and operational costs.

For the 2025 financial year, the company generated approximately A$2.1 billion in revenue, reflecting growth over earlier years as production expanded and gas demand remained strong.

However, the company reported a statutory net loss of about A$43.8 million, reflecting asset impairments, higher operating costs and lower oil prices during the period. Despite this loss, underlying operating performance remained relatively resilient, driven by strong gas prices and stable production in key basins.

In the first half of FY2026, Beach Energy reported revenue of about A$981.7 million, only slightly lower than the previous year. Net profit after tax for the period declined to A$150.2 million, roughly 32% lower year-on-year, as oil prices softened and production volumes fell by about 7%.

Production during the same period totalled around 9.5 million barrels of oil equivalent (MMboe). The company maintained a production mix dominated by natural gas, which accounted for a significant portion of sales revenue.

Beach Energy has also been working to improve its balance sheet. By mid-2025, the company had reduced total debt to roughly A$538 million, down from more than A$750 million the previous year.

While recent financial results have been affected by lower oil prices and operational challenges, the company continues to generate strong cash flow from its gas-focused assets and maintains a relatively manageable debt position.

Outlook

The future outlook for Beach Energy is closely tied to the development of new gas projects and its ability to increase production in key basins.

The most significant growth driver is the Waitsia Stage 2 gas project in Western Australia. Once fully operational, this project is expected to produce up to 250 terajoules of gas per day and supply gas to the North West Shelf LNG export facility. The project is widely seen as a transformational asset that could substantially boost Beach Energy’s output and revenue over the coming years.

In addition to Waitsia, the company is expanding exploration and drilling programs across its portfolio. These include the Equinox drilling campaign in the Otway and Bass Basins and continued development in the Cooper Basin oil fields. These initiatives aim to stabilise production levels and replace declining output from mature assets.

For the 2026 financial year, Beach Energy has maintained production guidance of 19.7–22.0 million barrels of oil equivalent, indicating relatively stable production expectations. Capital expenditure is expected to remain significant as the company continues investing in exploration and development projects.

From a market perspective, demand for natural gas in Australia remains strong as the country transitions toward lower-carbon energy systems. Gas is widely considered a bridging fuel that supports renewable energy generation and ensures grid reliability.

However, the company also faces challenges. Delays or cost overruns in major projects, fluctuations in oil and gas prices and regulatory changes in Australia’s energy market could affect profitability.

Woodside Energy Group (ASX: WDS)

Source: asx.com

Woodside Energy Group is Australia’s largest independent oil and gas producer and one of the world’s major liquefied natural gas (LNG) suppliers. The company was founded in 1954 and is headquartered in Perth, Western Australia. Over the decades, it has evolved from a domestic petroleum explorer into a global energy company with operations spanning Australia, the Americas, Africa and Asia-Pacific. Click here to see all our latest articles about Woodside Energy Group.

Woodside’s core business includes the exploration, development, production and marketing of hydrocarbons, including LNG, crude oil, pipeline gas, condensate and natural gas liquids. Its operations are built around a portfolio of large offshore projects and LNG infrastructure. Major Australian assets include the North West Shelf project, Pluto LNG, and the Scarborough energy development, which together form a crucial part of Australia’s LNG export industry.

The company strengthened its global footprint after merging with BHP’s petroleum business in 2022, creating a larger diversified portfolio of producing assets and development opportunities. Today, Woodside’s production base spans offshore projects in Australia, Senegal, the Gulf of Mexico and other regions, providing geographic diversification and long-life reserves.

Woodside’s strategy centres on expanding LNG supply to meet global energy demand, particularly from Asian and European markets. Natural gas remains a major part of the energy transition because it emits less carbon than coal while supporting electricity generation and industrial demand.

Beyond hydrocarbons, the company is also exploring low-carbon initiatives, including ammonia, hydrogen, and carbon management projects. By combining long-life LNG assets with new developments across the global energy landscape, Woodside aims to maintain its position as a major energy supplier while gradually adapting to the evolving global energy landscape.

Financials

Woodside Energy remains one of the most profitable energy companies listed on the Australian Securities Exchange. Its financial results largely depend on global oil and LNG prices, production volumes and operating efficiency.

For 2025, the company reported revenue of about US$13.2 billion, reflecting steady performance despite softer commodity prices compared with previous years.

Net profit after tax reached approximately US$2.7 billion, while underlying profit was about US$2.6 billion, showing the company’s ability to maintain strong earnings even in a volatile energy market.

Production performance was particularly strong. Woodside delivered a record annual output of about 198.8 million barrels of oil equivalent (MMboe) in 2025. This record production reflects the scale and reliability of its global LNG and oil portfolio.

Operational efficiency has also been a key strength. Reliability across major facilities exceeded 96–98%, helping the company maintain stable production levels and reduce unit production costs to around US$7.8 per barrel of oil equivalent.

Woodside also generates strong cash flow. In 2025, the company generated roughly US$1.9 billion in free cash flow, providing the financial capacity to fund major development projects while continuing to return to shareholders.

Shareholders benefit through dividends as well. The company has maintained a high payout ratio, with dividends remaining an important part of its capital management strategy.

Woodside’s financial profile reflects a mature global energy producer with significant cash generation, strong operational performance and a diversified production base. However, its earnings remain sensitive to fluctuations in global oil and LNG prices.

Outlook

Woodside’s future outlook is closely linked to several major development projects that are expected to increase production and strengthen its global LNG position.

One of the most important near-term projects is the Scarborough Energy Project in Western Australia, which is nearing completion and is expected to deliver its first LNG cargo in 2026 through the expanded Pluto LNG facility.

Another major long-term growth driver is the Louisiana LNG project in the United States, a large-scale development expected to produce 16.5 million tonnes of LNG per year in its initial phase. Production is targeted to begin around 2029, with the potential to expand capacity even further.

These projects form part of Woodside’s strategy to expand its LNG portfolio and supply growing global demand for natural gas. Global energy consumption continues to rise, and many countries rely on LNG imports to support power generation and industrial activity as they transition away from coal.

Analysts expect Woodside’s production and revenue to grow as these new assets come online. The company is targeting a significant increase in LNG capacity over the next decade, potentially supplying more than 24 million tonnes of LNG annually across its global portfolio.

However, several risks remain. Large energy projects involve significant capital investment and can face delays, cost overruns or regulatory challenges. Additionally, Woodside’s earnings remain exposed to fluctuations in global oil and gas prices.

Despite these uncertainties, Woodside appears well-positioned for long-term growth. Its combination of large LNG projects, diversified global assets, and a strong balance sheet could enable the company to remain a dominant player in the global energy market while gradually adapting to the evolving energy transition.

Read our latest detailed report on Woodside Energy here.

FAQs about the best ASX Oil and Gas Companies to Invest in

Which types of ASX companies benefit the most from rising oil and gas prices?

The biggest beneficiaries are usually upstream exploration and production companies. These firms extract crude oil and natural gas directly, so when global energy prices rise, their revenue and profit margins can increase quickly. Companies involved in LNG exports can also benefit as higher prices often lift export earnings.

Do higher oil and gas prices always lead to higher share prices for energy companies?

Not always. While rising commodity prices can improve company earnings, share prices also depend on factors like production costs, debt levels, operational efficiency, and overall market sentiment. If costs rise or production falls, a company may not fully benefit from higher energy prices.

Are smaller ASX energy companies more sensitive to oil and gas price increases?

Yes, in many cases, smaller or mid-cap energy producers react more strongly to price movements. Because they often have fewer assets and tighter margins, even modest increases in oil or gas prices can significantly improve profitability and attract investor interest.