UBS lists the best European oil stocks, Iran risk premium pushes up crude oil prices

Investing.com – UBS has updated its geopolitical investment strategy, highlighting several European oil stocks most likely to benefit from Iran-related risk premiums driving up crude oil prices.

The broker stated that escalating tensions in the Middle East could favor upstream producers with higher production shares in the short term, while integrated oil giants with structural advantages remain its long-term preferred buy targets.

TotalEnergies

UBS reaffirmed its “Buy” rating, believing that this French giant combines a solid upstream business with one of the strongest project reserves in the sector.

The broker emphasized that if oil prices stay high, production growth and high-return development projects will be key differentiators.

TotalEnergies is seen as capable of benefiting from short-term price surges while also driving long-term valuation multiples through disciplined capital allocation.

Eni

Eni is also rated as a “Buy,” with UBS stating it has the “highest quality expenditure” among European peers.

The Italian group’s upstream portfolio and visible production growth give it significant leverage to higher oil prices, while its strong balance sheet and capital returns provide downside support when geopolitical premiums diminish.

Galp

UBS views Galp as a high-beta play betting on rising oil prices, supported by attractive growth prospects and improving free cash flow.

The broker noted that the valuation does not fully reflect the company’s medium-term project potential, and if Brent crude rises due to Middle Eastern supply concerns, this stock could become an attractive choice.

OMV

OMV is rated as a “Buy,” with exposure to both upstream leverage and chemicals.

UBS believes the stock performs well on valuation metrics and cash flow yields, and could benefit from stronger oil-related earnings if geopolitical tensions tighten supply expectations.

Seplat

In the oilfield services sector, UBS emphasizes that Seplat will benefit from sustained higher crude prices, which could accelerate final investment decisions (FIDs).

Although service companies tend to be more cyclical, the broker believes that if prices remain high, Seplat has the potential to turn profitable and leverage operations.

Norwegian State Oil Company

Although UBS maintains a “Sell” rating based on valuation reasons, it notes that the Norwegian State Oil Company has shown the most positive short-term response to geopolitical exposure.

With minimal production risks in the Middle East but high sensitivity of upstream business to oil prices, this Norwegian group could tactically outperform during periods of rising risk premiums.

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