Raize Finance States Energy Stocks Present Upside Opportunities Amid Iran Conflict

Investing.com – Raymond James analysts say that after recent investor meetings and a conference held by the company in Orlando, they believe the risk of oil-related stocks is showing an asymmetric upside trend.

The brokerage pointed out that the Iran conflict, which began in early March, has dominated investor discussions about energy portfolio allocations. The company stated that although investors acknowledge that this situation might be different, they still seem to be operating with the inertia of decades-long complacency regarding geopolitical risks.

Raymond James said that the conflict has entered its third week, and no solution is in sight in the short term, while global oil inventories are decreasing by several million barrels daily. The company noted that this alleviates concerns about oversupply that existed earlier this year.

Analysts noted that despite spot oil prices soaring and the futures curve being well above early-year levels, Canadian energy stocks have only increased by mid-single digits percentage-wise since early this month. Raymond James said the market is underreacting to the largest supply shock managed by this generation of investors.

Regarding the strong performance of Canadian energy stocks in February, Raymond James stated that, aside from geopolitical risks, several other factors may explain these gains. The company listed improvements in Canada’s political and regulatory environment, a clear path for expanding oil exports, sector rotation into energy due to AI disruption concerns, a weak Canadian dollar, narrowing WCS spreads, and low starting points under continued discipline.

Raymond James indicated that, at WTI oil prices of $70 per barrel, many upstream energy stocks are still trading with sustainable double-digit free cash flow yields. The company added that considering the substantial impact on global inventories over the past two weeks and the expected continued reduction in flow through the Strait of Hormuz, this seems easily insurable in the coming years.

The brokerage stated that the FY26 strip for the remainder of this year is priced above $85 per barrel, while the FY27 strip is slightly above $70 per barrel. Raymond James said that the risk bias for strip prices in the coming years is upward.

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