Brent Crude Hits US$118 After Iran Strikes Dubai Tanker: Is It Too Late to Buy ASX Energy Stocks?

ASX energy stocks rally: buy now or wait?

An Iranian drone struck the Kuwaiti oil tanker Al-Salmi at Dubai Port’s anchorage overnight, setting the fully loaded vessel ablaze and sending oil prices even higher. All 24 crew members are safe, and the fire has been brought under control. But the message this attack sends to energy markets is anything but calm. Brent crude has surged roughly 60% in March alone, its biggest monthly gain since the contract began trading in 1988, and is currently trading nearly US$118 per barrel. For investors holding ASX energy stocks, the question is no longer whether the rally is real. It is whether there is any road left to run.

What are the Best ASX Energy Stocks to invest in right now?

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Why the Recent Tanker Strike Changes the Equation for ASX Energy Stocks

Previous Iranian attacks targeted vessels near the Strait of Hormuz itself. This one hit a ship sitting inside Dubai’s anchorage zone, one of the busiest shipping areas in the entire Persian Gulf. That is a meaningful escalation in both geography and boldness.

The Strait of Hormuz carries roughly 20% of the world’s daily oil supply, and Iran has effectively shut it to most shipping since the US and Israel launched strikes on Iran in late February. What today’s attack tells investors is that the conflict is not cooling. It is getting closer to the UAE, a vital hub for global energy logistics. We believe this keeps a genuine war premium embedded in oil prices, and that supports near-term earnings for ASX producers.

Woodside, Santos and Karoon: Buy, Hold or Wait?

Woodside (ASX: WDS) is the safest way to play this rally. The stock has surged around 50% in 2026, yet it still offers a dividend yield above 5% and carries the operational scale to absorb any oil price pullback without serious financial stress. Its LNG contracts also offer some pricing protection that pure oil producers simply do not have. In our view, Woodside remains the most sensible option for investors who want energy exposure without losing sleep over daily oil price swings.

Santos (ASX: STO) is compelling for patient investors. The company shipped its first LNG cargo from the long-awaited Barossa project in January 2026, and production is expected to grow roughly 30% by 2027 as Barossa and the Pikka project in Alaska ramp up together. Rising output meeting elevated prices is a powerful earnings combination. Much of the near-term upside may already be priced in after a roughly 25% gain in 2026, but the production growth story gives Santos a longer-dated catalyst that Woodside does not have.

Karoon Energy (ASX: KAR) offers the highest direct oil price leverage of the three, with production drawn from offshore oil fields in Brazil and the US Gulf of Mexico. At a price-to-earnings ratio below 8, it is also the cheapest on a valuation basis. The trade-off is volatility. When oil fell sharply on unconfirmed peace-talk rumours earlier this month, Karoon dropped more sharply and faster than its larger peers.

The Investor’s Takeaway for ASX Energy Stocks

The bull case rests on genuine disruption. The IEA estimates the conflict has already removed at least 10 million barrels per day from global supply, the largest disruption in the history of the global oil market, a loss that emergency reserve releases have not been able to offset. That is not just fear pricing.

The risks are real, too. Any peace signal or Hormuz reopening could unwind the war premium quickly. The US Energy Information Administration forecasts Brent could fall back below US$80 in the third quarter of 2026 if tensions ease. OPEC+ is also set to increase production from April.

Our verdict: Woodside suits cautious investors as a measured entry or steady hold. Santos rewards those willing to back the production ramp over a 12 to 24-month horizon. Karoon suits investors who want maximum oil exposure and can handle sharp moves in either direction. For anyone still on the sidelines, waiting for oil to find a clearer floor looks more disciplined than chasing the rally above US$118.