Shares of oil and gas explorer W&T Offshore, Inc. (NYSE:WTI) jumped as much as 15.6% in trading Wednesday after gas prices hit a two-year high. Shares were still up 11.7% at 3:55 p.m. EST.
The price of WTI crude oil jumped 3.4% to as high as $61.81 as I'm writing on fear that protests in Iran could hurt oil output. Brent crude, the global benchmark, was up 1.9% to $67.84 per barrel. Rising oil prices could directly help W&T Offshore's bottom line, which has struggled since oil prices first began dropping in 2014.
Oil prices are reacting to the potential of a supply shortage in Iran, although one hasn't arisen yet. Still, traders are worried that any threat to one of the biggest oil producers in the world could have a big impact on the supply/demand balance.
It's a natural reaction for an oil company stock to rise when oil prices rise. But nothing fundamentally changed about W&T Offshore today, so investors shouldn't be too alarmed. The long-term trends of oil will be more important to watch, especially when you consider that companies typically hedge their oil production and don't sell on the spot market, where these trades are taking place. If oil falls tomorrow, the gains of the day could be gone quickly.