European oil stocks are once again realigning with crude oil prices, as the political narrative shifts from decarbonization toward energy security. After diverging in 2022, equity-to-oil price correlations have strengthened, with integrated oil companies like Shell, BP, and TotalEnergies showing renewed sensitivity to Brent price movements.
However, the story is far more nuanced. CFRA’s proprietary analysis reveals that equities are now trading on a mix of traditional energy fundamentals, energy security premiums, and transition positioning—making forecasts increasingly company-specific.
Key insights from this research include:
- Correlation Reset – European oil majors have returned to stronger positive correlations with Brent crude, signaling a shift back toward fundamentals.
- Earnings vs. Price Disconnect – Consensus earnings growth of +7.9% in 2026 stands in sharp contrast to the U.S. EIA’s forecast of a 24% decline in Brent prices to $51/bbl.
- Sector Implications – Integrated oil companies face medium-term headwinds from lower prices, while service providers like Subsea 7 retain some cushion from order backlogs.
- Stock-Specific Calls – Negative implications for Aker BP, BP, Eni, Equinor, Galp, Neste, OMV, Repsol, Tenaris, and TotalEnergies, with more favorable relative positioning for Subsea 7 and Shell.
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