Barclays Sees Bright Future for Energy Services Once Iran Conflict Ends

The European energy services sector is expected to see an increase in demand once the Middle East conflict de-escalates, according to Barclays Plc analysts.

Companies like Technip Energies SA and Viridien SA are set to benefit as countries look to replenish their inventories and repair damage caused during the conflict. The volatility in oil and gas prices and disruptions to supply since late February will prompt more nations to take action on energy security, analysts led by Mick Pickup said.

The era of outsourcing production and refining to lower-cost mega producers appears to be waning, according to Barclays. As a result, countries with resources are looking to secure their own domestic supply, which supports demand for the services sector from exploration through construction.

Barclays upgraded its recommendation on Viridien to overweight and increased its price target to €200 from €150, citing the company's potential to win more work as the industry diversifies its supply chains. Technip Energies was also double-upgraded by Barclays, which sees the company as a frontrunner for repair work in Qatar.