Woodside (ASX:WDS) Falls 4% as Oil Plunges 7.8% on US-Iran Peace Hopes

Woodside Slips as US-Iran Peace Hopes Hit Oil

Woodside Energy (ASX:WDS) shares fell 4.2% to A$30.49 today after oil prices crashed overnight. Brent crude tumbled 7.8% to close at around US$101 a barrel after US President Donald Trump paused “Project Freedom”, the US naval escort operation in the Strait of Hormuz, signalling a US-Iran peace deal could be just days away. For Australia’s biggest oil and gas producer, this is a real shift. The fear-driven oil rally that had been boosting Woodside’s earnings outlook is now starting to unwind, and the share price is feeling it.

Why the Peace Deal Hurts Woodside

Woodside makes its money by selling oil, gas, and LNG (liquefied natural gas) from large projects like Pluto LNG and the North West Shelf. When oil prices fall, Woodside’s revenue follows. It’s that simple.

Here’s the bigger problem. A lot of the recent oil price strength came from one thing: fear. Fear that the US-Iran conflict would block the Strait of Hormuz, where about 20% of the world’s oil flows through each day. With Trump now signalling a peace deal, sent to Tehran through Pakistani intermediaries, that fear is melting away, and so is the oil price premium that came with it.

For Woodside, this hits in two places. First, lower oil prices mean less money from crude oil sales. Second, much of Woodside’s LNG is sold under long-term contracts linked to oil prices, so when oil falls, LNG income often falls with it.

What Woodside Still Has in Its Favour

Even with today’s drop, Woodside still has plenty of strengths investors shouldn’t ignore.

The company has a strong balance sheet, a global portfolio of long-life projects, and one of the most reliable dividend records on the ASX. It generated US$12.98 billion in revenue in 2025 and continues to invest in major future growth, including the US$17.5 billion Louisiana LNG project in the United States (22% complete at year-end 2025, first LNG targeted for 2029) and the Scarborough gas project in Western Australia (94% complete by the end of 2025).

We believe Woodside’s gas business is the key to its long-term story. In 2025, the company signed six new portfolio supply agreements with buyers in Asia and Europe, adding to existing long-term LNG deals with customers in Japan, Korea, and China that will keep paying for years, no matter what oil does in the short term. Asian gas demand is also expected to keep rising as countries shift away from coal.

So while the oil side of the business is feeling the heat today, the gas side gives Woodside a steady, long-term income stream that helps balance the picture.

The Investor’s Takeaway for WDS

So what should investors do? In our view, the next few weeks could be bumpy. If the peace deal goes through, oil could drift down towards US$90 a barrel, putting more pressure on Woodside’s share price. But if talks break down, and Trump has already cautioned that a deal hasn’t been finalised and threatened to resume strikes if Iran doesn’t comply, oil and energy stocks could bounce back fast.

For income-focused investors, Woodside’s fully franked US 112-cent annual dividend remains attractive, and the company has a strong track record of paying through tough cycles. For growth investors, today’s drop may not yet be the bottom, so a little patience could lead to a better entry point.

The key takeaway is that Woodside hasn’t lost any of its core strengths today. What’s changed is the macro backdrop, not the business. For long-term investors, that’s worth keeping in mind before reacting too quickly to the headlines.