European Energy Stocks Diverge on Iran Conflict, Creating 'Oversold' Opportunities, Jefferies Says

The recent conflict involving Iran has created a sharp performance divide among European energy stocks, with several fundamentally sound companies now appearing 'oversold' and presenting buying opportunities, according to a new report from investment bank Jefferies.

Analysts at the firm note that since the conflict began in late February, investors have rewarded companies seen as direct beneficiaries of stronger oil and gas prices, while punishing others with limited operational exposure.

A Diverging Sector

Jefferies highlighted a clear split in the market, with some stocks rallying on improving earnings prospects while others have lagged. The brokerage pointed to several standout performers that have benefited from the market dynamics:

• Neste Oyj: Has rallied 33% since the conflict began, driven by stronger diesel prices and supportive renewable fuel regulations.
• Repsol: Gained 17%, with Jefferies citing the potential for an upgraded share buyback program.
• Equinor ASA: Climbed 13% on the back of firmer European gas prices and a clearer strategic outlook.
• Vår Energi: Rose 15%, supported by expectations for extraordinary dividends and long-term production growth.

'Oversold' Opportunities Identified

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In contrast, Jefferies argued that several heavyweight energy names have lagged despite resilient fundamentals, creating selective opportunities. The firm identified Shell PLC as one of its preferred "oversold" picks, noting that its recent acquisition of ARC Resources assets strengthens the case for its Canada LNG project.

TotalEnergies SE was also described as oversold, with its diversified portfolio helping to offset Middle East risks. In the exploration and production (E&P) space, Jefferies said stocks including Serica Energy, Harbour Energy, and Kosmos Energy now look undervalued given their improving balance sheets and strategic progress.

Outlook for Oilfield Services

Jefferies also flagged opportunities among oilfield service companies that have underperformed. Firms such as Maire, Technip Energies, GTT, and TechnipFMC have seen their stocks lag despite having limited direct disruption from the conflict and maintaining healthy order pipelines.

The brokerage argued that these service companies could benefit if regional reconstruction spending accelerates once geopolitical tensions ease. Jefferies concluded that the broad dispersion in share performance reflects an investor debate over which companies deserve a geopolitical premium, creating value in those that have been unfairly left behind.