Has the Iran conflict fundamentally changed the energy landscape?

Investing.com -- Jefferies says the Iran conflict has fundamentally reshaped the energy landscape, arguing that “advancements in drone technology… should drive a higher risk premium in energy equities going forward.”

Analyst Lloyd Byrne wrote that investors should “stay focused on two key questions: (1) How long will the conflict last? (2) Should the expected pullback be bought?”

Jefferies said positioning rather than fundamentals has dominated recent trading, noting that the VIX triggered “significant end-of-week unwinding” and “non-fundamental price action.”

As a result, software rebounded while Exxon Mobil and Chevron lagged. But the core issue, Byrne argued, is that “the Iranian conflict has unfolded differently than energy investors expected,” especially given “the closure of the Strait and the heightened vulnerability of Ras Laffan.”

The firm said the market is now confronting risks that had faded during the shale era.

“One event could drive significant inflation for a long time,” Jefferies wrote, adding that drone technology raises the likelihood that “a single ‘choke point’… can once again result in prolonged price shocks.”

Against that backdrop, Jefferies believes investors should prepare to “buy during the inevitable ‘consensus pullback’ that typically follows the end of geopolitical conflicts.”

The note points to underweight positioning in oil and gas equities and highlighted oil-levered E&Ps such as OVV, COP, CVE, EOG and NOG as buy-rated names.

Still, Jefferies cautioned that uncertainty remains high, including the future leadership in Iran, and that oil-service stocks may continue to lag given rising questions about second-half 2026 growth.

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