Investing.com -- Mizuho struck a bullish tone on select U.S. oil and gas names, arguing that heightened geopolitical tensions have created a mispricing that investors can exploit.

In a new sector update, analyst Nitin Kumar told investors that the prolonged Iran crisis is likely to keep global crude prices elevated for longer, while refining margins are set to strengthen meaningfully.

“As we approach 90 days of the Iran conflict, and SOH closure, we don’t expect a normalization of crude supply until 1Q27,” Kumar wrote, adding that unprecedented inventory draws now imply a “-2.7 mmb/d undersupply in 2026.”

The bank raised its Brent crude forecasts for 2026 and 2027 by roughly 25% and 6%, respectively, to $91.55 and $79.35 per barrel.

Despite strong year-to-date performance for the sector, Mizuho said a recent pullback in equities, paired with elevated commodity prices, creates an opportunity “for investors to seek ‘alpha’ in U.S. Oil & Gas.”

The firm believes valuations appear dislocated across large-cap oil-focused producers and natural-gas E&Ps, with more selective upside in refining.

Mizuho named Devon Energy (NYSE: DVN), EQT (NYSE: EQT), and Permian Resources (NYSE: PR) as its sector Top Picks, adding that EQT was elevated to “Top Pick” status in the latest update.

As part of its rating changes, the bank upgraded Phillips 66, Par Pacific Holdings and Gulfport Energy to Outperform, while downgrading HF Sinclair and Kosmos Energy.