One of today’s more incredible movers is Indonesia Energy (NYSEMKT:INDO) stock. Shares of the Indonesia-based oil and gas exploration company surged more than 100% at their peak today. At the time of this writing, INDO stock has held onto most of these gains, still up more than 65% in late afternoon trading.
This move comes as the price of oil continues to rise higher on geopolitical concerns. A number of factors, including the ongoing Israel-Palestine conflict and supply-related concerns, have pushed up the price of WTI and Brent crude.
With tensions in the Middle East ratcheting up and the region’s importance to the overall energy trade, there’s plenty of speculation that oil prices could hit triple digits once again. That’s not great for the inflation story and certainly suggests that interest rate cuts could take longer to materialize. That could lead to a stronger dollar, providing some downside pressure on commodity prices. However, those catalysts appear to be overshadowed by broader concerns that war could be on the horizon.
Let’s dive into what to make of this — and why INDO stock is seeing such an outsized move higher today.
Why Is INDO Stock Surging Today?
First and foremost, Indonesia Energy is one of the smaller-cap players in the oil and gas space. Any sort of continued move higher in global benchmark energy prices is going to provide an outsized catalyst for such a company. With a market capitalization of less than $50 million (after today’s rise), INDO stock is the sort of higher-leverage play traders appear to be focusing on in this sector.
Given geopolitical concerns in the Middle East, companies with operations focused in other key areas of production are seeing nice moves today. Indonesia is one market that has been largely overlooked and this company’s status as a key player there is noteworthy. I’m going to be keeping an eye on other Asia-focused businesses in the energy sector on this move as well. I wouldn’t be surprised to see similar moves from peers as investors broaden out their exposure.
If the price of oil continues on its path, companies that require higher oil prices to see greater drilling and exploration activity could benefit in a big way. That’s a relatively simple thesis. But it appears to be playing out in significant fashion today, as investors continue to rotate back into the energy sector.
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On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
