Viva Energy Shares Lead The ASX 200 as Oil Prices Rally

Viva Energy shares (ASX:VEA) rocketed 11.89% on Thursday to lead the ASX 200 higher, as the escalating conflict in the Middle East sent oil prices sharply higher, erasing most of the fuel retailer’s year-to-date losses in a single session.

The Viva Energy share price closed at A$2.07, leaving holders down just 0.96% for 2026 after recovering nearly all of its early-year decline. The move came as energy stocks led the broader Australian market higher, with rival Ampol also jumping 8.5% on the day.

The rally follows a volatile start to the year for Viva shares, which had fallen roughly 9% in late January despite reporting improved fourth-quarter volumes and refining margins.

Oil Price Spike Drives Sector

The immediate catalyst for the move was a sharp spike in crude oil prices following the late-February escalation of joint US-Israel military strikes on Iranian strategic facilities. Brent crude hit a 14-month high near US$82 per barrel over the weekend and continues higher at $83.94, while West Texas Intermediate rose more than 6% to US$72 as markets priced in a war-risk premium, with prices since moving to $77.20 per barrel.

The conflict has effectively disrupted the Strait of Hormuz, the critical chokepoint for Gulf crude exports, triggering supply fears across global energy markets. Energy stocks globally have rallied on the supply disruption, with investors seeking exposure to fossil-fuel security plays as the crisis unfolds.

For Viva, the dynamic is more complex than for upstream producers. As a downstream refiner and marketer operating the Geelong refinery and more than 1,200 retail and convenience sites across Shell, OTR and Liberty brands, the company is leveraged more to refining margins and fuel retail spreads than to absolute oil price levels. In the near term, however, markets appear to be pricing the view that refiners can benefit if wholesale prices and retail margins adjust faster than input costs, particularly when demand remains resilient.

Strong Second-Half Turnaround Underpins Sentiment

Today’s rally builds on improving sentiment following Viva’s full-year 2025 results released on 24 February. The company reported replacement-cost EBITDA of A$701 million for the full year, down roughly 6% year-on-year, but second-half performance showed a marked improvement.

Second-half EBITDA of A$396 million represented a 30% increase over the first half and a 33% jump versus the prior corresponding period. Group fuel sales reached 17.0 billion litres, roughly flat year-on-year, while Commercial & Industrial volumes hit a record 11.8 billion litres, up 0.9%. The Geelong refinery’s gross refining margin improved approximately 10% to US$9.6 per barrel, aided by the commissioning of ultra-low sulphur gasoline units in the fourth quarter.

The company posted a reported net loss of A$421 million for the full year, largely due to non-cash impairments and transition costs associated with integrating the OTR and Liberty Convenience acquisitions. Despite the headline loss, management declared a fully franked final dividend of 3.94 cents per share and guided capital expenditure lower to A$350-400 million for fiscal 2026, down from A$494 million in 2025, supporting a path to deleveraging.

Retail Transformation Showing Early Results

A key focus for markets has been Viva’s retail transformation strategy, centred on converting legacy Reddy Express sites to the higher-performing OTR format. The company completed 25 conversions during fiscal 2025, delivering on average a 10% uplift in ex-tobacco convenience sales and a 27% increase in fuel volumes, with top-decile sites performing significantly better.

The retail network now spans more than 1,200 sites following the exit from the Coles Transitional Services Agreement and full integration onto Viva’s own systems. Management has guided for 40-60 additional OTR conversions in fiscal 2026 as it seeks to extract further synergies from the combined convenience platform.

In early February, Viva appointed Teresa Rendo as CEO of its Convenience & Mobility division, signalling renewed focus on the segment that represents the company’s main structural growth vector. The appointment came amid sell-side commentary from Jefferies highlighting that rival Ampol appeared to be executing more effectively in fuel and convenience, positioning Viva as the catch-up story in the sector.

Board Renewal Adds Fresh Perspective

Effective 1 March, Viva’s board underwent a significant refresh. Long-serving chair Robert Hill retired after approximately 10 years, with Dr Sarah Ryan, a non-executive director since 2018 with more than 30 years in the global energy sector, assuming the chair role. The board also welcomed Alistair Bell, former CFO of Metcash and GrainCorp, as an independent non-executive director.

The governance changes bring deep retail, supply-chain and consumer experience to board oversight at a time when Viva is positioning itself as an integrated fuel and convenience player rather than a pure refining business.

Macro Tailwind Meets Execution Risk

The immediate outlook for Viva shares hinges on two distinct narratives. The macro tailwind from elevated oil prices and energy-security rotation provides near-term support, particularly if Middle East tensions remain elevated. Today’s move demonstrates the stock’s sensitivity to geopolitical risk premiums and its positioning as a domestic energy play in a supply-disrupted environment.

The structural story, however, rests on execution. Viva must deliver on its guided 40-60 store conversions in fiscal 2026 while bedding down new systems and proving that convenience margins can sustainably improve under the new OTR-led model. The company carries net debt of approximately A$2.1 billion, which is manageable but material for a downstream business operating in a cyclical, low-margin industry.

Early-year trading had been choppy, with shares falling 9% in late January despite reporting improved fourth-quarter volumes and refining margins, suggesting markets remain sceptical about the pace and profitability of the retail transformation. The strong second-half fiscal 2025 result helped reset sentiment, but investors will be watching closely for evidence that the earnings momentum can be sustained.

If the Iran conflict de-escalates and the oil-price risk premium unwinds, Viva could lose both its immediate macro tailwind and the geopolitical-hedge narrative that has supported energy stocks in recent sessions. In that scenario, the stock would trade primarily on its own execution and earnings quality, which remain in a transition phase despite the encouraging second-half rebound. On the other hand; sustained higher refining margins and visible proof points from the OTR rollout could support further re-rating toward consensus price targets, particularly if the new divisional and board leadership can accelerate the convenience turnaround and maintain capital discipline as the business deleverages.