Jefferies Identifies 'Oversold' European Energy Stocks Amid Geopolitical Shifts

Geopolitical tensions stemming from the Iran conflict have created a sharp divide in the performance of European energy stocks, with investment bank Jefferies identifying several companies as "oversold" and presenting potential buying opportunities. The brokerage notes that while some stocks have rallied on higher commodity prices, others have lagged despite limited operational exposure to the conflict.

A Widening Performance Gap

According to an analysis by Jefferies, the market has sharply distinguished between perceived winners and losers since the conflict escalated in late February. The firm highlighted several companies that have benefited from stronger energy prices and improved earnings outlooks.

• Neste Oyj has been a standout performer, rallying 33% on the back of stronger diesel prices and supportive renewable fuel regulations.
• Repsol has gained 17%, with Jefferies citing the potential for an upgraded share buyback program.
• Equinor ASA climbed 13%, supported by firmer European natural gas prices.

In the exploration and production (E&P) sector, Jefferies noted that Vår Energi rose 15% on expectations of extraordinary dividends, while Tullow Oil gained 11% after completing a key refinancing.

Lagging Giants Flagged as Opportunities

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In contrast to the rally in some corners of the market, Jefferies argued that several heavyweight energy names now appear undervalued. The bank identified these companies as having resilient fundamentals that are not reflected in their recent stock performance.

Jefferies named Shell PLC as one of its preferred "oversold" opportunities, pointing to its acquisition of ARC Resources assets as a move that extends its reserve life. TotalEnergies SE was also described as oversold, with the bank noting its diversified portfolio helps mitigate risks in the Middle East. The brokerage also suggested Ithaca Energy PLC offers greater flexibility for potential acquisitions.

Beyond the Integrated Majors

The analysis also extended to other parts of the energy value chain. Within the E&P space, Jefferies said stocks including Serica Energy, Harbour Energy, and Kosmos Energy now look oversold despite their improving balance sheets and stronger liquidity.

Similarly, several oilfield service companies—including Maire, Technip Energies, GTT, and TechnipFMC—have underperformed. Jefferies argued these firms have limited direct disruption from the conflict, maintain healthy order pipelines, and could benefit from regional reconstruction spending once tensions ease. This broad dispersion in performance, Jefferies concluded, has created selective buying opportunities across the European energy sector.